Correlation Between Arbor Metals and VersaBank

Can any of the company-specific risk be diversified away by investing in both Arbor Metals and VersaBank 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 VersaBank 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 VersaBank, you can compare the effects of market volatilities on Arbor Metals and VersaBank 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 VersaBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Metals and VersaBank.

Diversification Opportunities for Arbor Metals and VersaBank

0.0

Correlation Coefficient

Arbor Metals  VersaBank

Pay attention - limited upside

The 3 months correlation between Arbor and VersaBank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Metals Corp and VersaBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VersaBank 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 VersaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VersaBank has no effect on the direction of Arbor Metals i.e., Arbor Metals and VersaBank go up and down completely randomly.

Pair Corralation between Arbor Metals and VersaBank

Assuming the 90 days horizon Arbor Metals Corp is expected to under-perform the VersaBank. In addition to that, Arbor Metals is 1.41 times more volatile than VersaBank. It trades about -0.2 of its total potential returns per unit of risk. VersaBank is currently generating about -0.05 per unit of volatility. If you would invest  2,142  in VersaBank on October 6, 2024 and sell it today you would lose (162.00) from holding VersaBank or give up 7.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Arbor Metals Corp  vs.  VersaBank

Arbor Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arbor Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

VersaBank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VersaBank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, VersaBank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Arbor Metals and VersaBank

The main advantage of trading using opposite Arbor Metals and VersaBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Metals position performs unexpectedly, VersaBank 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 VersaBank will offset losses from the drop in VersaBank's long position.

The idea behind Arbor Metals Corp and VersaBank 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.