Correlation Between Arbor Metals and Rocky Mountain

Can any of the company-specific risk be diversified away by investing in both Arbor Metals and Rocky Mountain at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Arbor Metals and Rocky Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arbor Metals Corp and Rocky Mountain Liquor, you can compare the effects of market volatilities on Arbor Metals and Rocky Mountain and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Arbor Metals with a short position of Rocky Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Metals and Rocky Mountain.

Diversification Opportunities for Arbor Metals and Rocky Mountain

0.41

Correlation Coefficient

Arbor Metals  Rocky Mountain

Very weak diversification

The 3 months correlation between Arbor and Rocky is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Metals Corp and Rocky Mountain Liquor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Mountain Liquor and Arbor Metals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Arbor Metals Corp are associated (or correlated) with Rocky Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Mountain Liquor has no effect on the direction of Arbor Metals i.e., Arbor Metals and Rocky Mountain go up and down completely randomly.

Pair Corralation between Arbor Metals and Rocky Mountain

Assuming the 90 days horizon Arbor Metals Corp is expected to generate 5.06 times more return on investment than Rocky Mountain. However, Arbor Metals is 5.06 times more volatile than Rocky Mountain Liquor. It trades about 0.26 of its potential returns per unit of risk. Rocky Mountain Liquor is currently generating about 0.14 per unit of risk. If you would invest  25.00  in Arbor Metals Corp on October 25, 2024 and sell it today you would earn a total of  22.00  from holding Arbor Metals Corp or generate 88.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Arbor Metals Corp  vs.  Rocky Mountain Liquor

Arbor Metals Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arbor Metals Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Arbor Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Rocky Mountain Liquor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rocky Mountain Liquor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Arbor Metals and Rocky Mountain

The main advantage of trading using opposite Arbor Metals and Rocky Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Metals position performs unexpectedly, Rocky Mountain can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Rocky Mountain will offset losses from the drop in Rocky Mountain's long position.

The idea behind Arbor Metals Corp and Rocky Mountain Liquor pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.