Correlation Between Arbor Metals and Nexus Gold

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

Diversification Opportunities for Arbor Metals and Nexus Gold

0.23

Correlation Coefficient

Arbor Metals  Nexus Gold

Modest diversification

The 3 months correlation between Arbor and Nexus is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Metals Corp and Nexus Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexus Gold Corp 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 Nexus Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexus Gold Corp has no effect on the direction of Arbor Metals i.e., Arbor Metals and Nexus Gold go up and down completely randomly.

Pair Corralation between Arbor Metals and Nexus Gold

If you would invest  249.00  in Arbor Metals Corp on October 22, 2024 and sell it today you would lose (245.40) from holding Arbor Metals Corp or give up 98.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.52%
Values	Daily Returns

Arbor Metals Corp  vs.  Nexus Gold Corp

Arbor Metals Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arbor Metals Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Arbor Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Nexus Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexus Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Nexus Gold is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Arbor Metals and Nexus Gold

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

The idea behind Arbor Metals Corp and Nexus Gold Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.