Correlation Between Alaska Energy and Caldwell Partners

Can any of the company-specific risk be diversified away by investing in both Alaska Energy and Caldwell Partners 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 Alaska Energy and Caldwell Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alaska Energy Metals and Caldwell Partners International, you can compare the effects of market volatilities on Alaska Energy and Caldwell Partners 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 Alaska Energy with a short position of Caldwell Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Energy and Caldwell Partners.

Diversification Opportunities for Alaska Energy and Caldwell Partners

-0.64

Correlation Coefficient

Alaska Energy  Caldwell Partners

Excellent diversification

The 3 months correlation between Alaska and Caldwell is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Energy Metals and Caldwell Partners Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caldwell Partners and Alaska Energy 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 Alaska Energy Metals are associated (or correlated) with Caldwell Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caldwell Partners has no effect on the direction of Alaska Energy i.e., Alaska Energy and Caldwell Partners go up and down completely randomly.

Pair Corralation between Alaska Energy and Caldwell Partners

Assuming the 90 days trading horizon Alaska Energy is expected to generate 1.89 times less return on investment than Caldwell Partners. In addition to that, Alaska Energy is 2.14 times more volatile than Caldwell Partners International. It trades about 0.02 of its total potential returns per unit of risk. Caldwell Partners International is currently generating about 0.08 per unit of volatility. If you would invest  117.00  in Caldwell Partners International on October 22, 2024 and sell it today you would earn a total of  3.00  from holding Caldwell Partners International or generate 2.56% return on investment over 90 days.

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

Alaska Energy Metals  vs.  Caldwell Partners Internationa

Alaska Energy Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alaska Energy Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary 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.

Caldwell Partners

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Caldwell Partners International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Caldwell Partners may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Alaska Energy and Caldwell Partners

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

The idea behind Alaska Energy Metals and Caldwell Partners International 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.