Correlation Between ARC Resources and Champion Iron
Can any of the company-specific risk be diversified away by investing in both ARC Resources and Champion Iron 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 ARC Resources and Champion Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARC Resources and Champion Iron, you can compare the effects of market volatilities on ARC Resources and Champion Iron 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 ARC Resources with a short position of Champion Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARC Resources and Champion Iron.
Diversification Opportunities for ARC Resources and Champion Iron
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ARC and Champion is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding ARC Resources and Champion Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron and ARC Resources 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 ARC Resources are associated (or correlated) with Champion Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Iron has no effect on the direction of ARC Resources i.e., ARC Resources and Champion Iron go up and down completely randomly.
Pair Corralation between ARC Resources and Champion Iron
Assuming the 90 days trading horizon ARC Resources is expected to under-perform the Champion Iron. But the stock apears to be less risky and, when comparing its historical volatility, ARC Resources is 1.08 times less risky than Champion Iron. The stock trades about -0.26 of its potential returns per unit of risk. The Champion Iron is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 509.00 in Champion Iron on September 24, 2024 and sell it today you would earn a total of 8.00 from holding Champion Iron or generate 1.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ARC Resources vs. Champion Iron
Performance |
Timeline |
ARC Resources |
Champion Iron |
ARC Resources and Champion Iron Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ARC Resources and Champion Iron
The main advantage of trading using opposite ARC Resources and Champion Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARC Resources position performs unexpectedly, Champion Iron 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 Champion Iron will offset losses from the drop in Champion Iron's long position.ARC Resources vs. Enbridge Pref 5 | ARC Resources vs. Enbridge Pref 11 | ARC Resources vs. Enbridge Pref L | ARC Resources vs. E Split Corp |
Champion Iron vs. Black Iron | Champion Iron vs. Wesdome Gold Mines | Champion Iron vs. GoGold Resources | Champion Iron vs. Mason Graphite |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |