Correlation Between Ampleforth and Mayfair Gold

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

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

Diversification Opportunities for Ampleforth and Mayfair Gold

0.08

Correlation Coefficient

Ampleforth  Mayfair Gold

Significant diversification

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

Pair Corralation between Ampleforth and Mayfair Gold

Assuming the 90 days trading horizon Ampleforth is expected to generate 2.43 times more return on investment than Mayfair Gold. However, Ampleforth is 2.43 times more volatile than Mayfair Gold Corp. It trades about 0.12 of its potential returns per unit of risk. Mayfair Gold Corp is currently generating about 0.05 per unit of risk. If you would invest  96.00  in Ampleforth on September 5, 2024 and sell it today you would earn a total of  38.00  from holding Ampleforth or generate 39.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Ampleforth  vs.  Mayfair Gold Corp

Ampleforth

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ampleforth are ranked lower than 9 (%) 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.

Mayfair Gold Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mayfair Gold Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Mayfair Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ampleforth and Mayfair Gold

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

The idea behind Ampleforth and Mayfair 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.