Correlation Between Arizona Sonoran and Carlin Gold

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

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

Diversification Opportunities for Arizona Sonoran and Carlin Gold

0.59

Correlation Coefficient

Arizona Sonoran  Carlin Gold

Very weak diversification

The 3 months correlation between Arizona and Carlin is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Arizona Sonoran Copper and Carlin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlin Gold and Arizona Sonoran 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 Arizona Sonoran Copper are associated (or correlated) with Carlin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlin Gold has no effect on the direction of Arizona Sonoran i.e., Arizona Sonoran and Carlin Gold go up and down completely randomly.

Pair Corralation between Arizona Sonoran and Carlin Gold

Assuming the 90 days trading horizon Arizona Sonoran Copper is expected to generate 0.68 times more return on investment than Carlin Gold. However, Arizona Sonoran Copper is 1.46 times less risky than Carlin Gold. It trades about 0.2 of its potential returns per unit of risk. Carlin Gold is currently generating about 0.11 per unit of risk. If you would invest  139.00  in Arizona Sonoran Copper on December 29, 2024 and sell it today you would earn a total of  89.00  from holding Arizona Sonoran Copper or generate 64.03% return on investment over 90 days.

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

Arizona Sonoran Copper  vs.  Carlin Gold

Arizona Sonoran Copper

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arizona Sonoran Copper are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Arizona Sonoran displayed solid returns over the last few months and may actually be approaching a breakup point.

Carlin Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlin Gold are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Carlin Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arizona Sonoran and Carlin Gold

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

The idea behind Arizona Sonoran Copper and Carlin Gold 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.