Correlation Between Ampleforth and Eagle Plains

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

By analyzing existing cross correlation between Ampleforth and Eagle Plains Resources, you can compare the effects of market volatilities on Ampleforth and Eagle Plains 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 Ampleforth with a short position of Eagle Plains. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ampleforth and Eagle Plains.

Diversification Opportunities for Ampleforth and Eagle Plains

0.08

Correlation Coefficient

Ampleforth  Eagle Plains

Significant diversification

The 3 months correlation between Ampleforth and Eagle is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ampleforth and Eagle Plains Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Plains Resources and Ampleforth 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 Ampleforth are associated (or correlated) with Eagle Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Plains Resources has no effect on the direction of Ampleforth i.e., Ampleforth and Eagle Plains go up and down completely randomly.

Pair Corralation between Ampleforth and Eagle Plains

Assuming the 90 days trading horizon Ampleforth is expected to generate 0.94 times more return on investment than Eagle Plains. However, Ampleforth is 1.07 times less risky than Eagle Plains. It trades about 0.05 of its potential returns per unit of risk. Eagle Plains Resources is currently generating about 0.04 per unit of risk. If you would invest  120.00  in Ampleforth on October 9, 2024 and sell it today you would earn a total of  3.00  from holding Ampleforth or generate 2.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Ampleforth  vs.  Eagle Plains Resources

Ampleforth

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ampleforth are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Ampleforth exhibited solid returns over the last few months and may actually be approaching a breakup point.

Eagle Plains Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Plains Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Eagle Plains reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ampleforth and Eagle Plains

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

The idea behind Ampleforth and Eagle Plains Resources 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 Stocks Directory module to find actively traded stocks across global markets.