Correlation Between Arbor Metals and Western Investment
Can any of the company-specific risk be diversified away by investing in both Arbor Metals and Western Investment 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 Western Investment 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 Western Investment, you can compare the effects of market volatilities on Arbor Metals and Western Investment 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 Western Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Metals and Western Investment.
Diversification Opportunities for Arbor Metals and Western Investment
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arbor and Western is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Metals Corp and Western Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Investment 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 Western Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Investment has no effect on the direction of Arbor Metals i.e., Arbor Metals and Western Investment go up and down completely randomly.
Pair Corralation between Arbor Metals and Western Investment
Assuming the 90 days horizon Arbor Metals Corp is expected to generate 6.4 times more return on investment than Western Investment. However, Arbor Metals is 6.4 times more volatile than Western Investment. It trades about 0.14 of its potential returns per unit of risk. Western Investment is currently generating about 0.01 per unit of risk. If you would invest 26.00 in Arbor Metals Corp on December 2, 2024 and sell it today you would earn a total of 15.00 from holding Arbor Metals Corp or generate 57.69% 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. Western Investment
Performance |
Timeline |
Arbor Metals Corp |
Western Investment |
Arbor Metals and Western Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Arbor Metals and Western Investment
The main advantage of trading using opposite Arbor Metals and Western Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Metals position performs unexpectedly, Western Investment 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 Western Investment will offset losses from the drop in Western Investment's long position.Arbor Metals vs. Kiplin Metals | Arbor Metals vs. Pure Energy Minerals | Arbor Metals vs. Noram Lithium Corp | Arbor Metals vs. Minnova Corp |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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