Correlation Between Arizona Sonoran and Excellon Resources

Can any of the company-specific risk be diversified away by investing in both Arizona Sonoran and Excellon Resources 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 Excellon Resources 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 Excellon Resources, you can compare the effects of market volatilities on Arizona Sonoran and Excellon Resources 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 Excellon Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arizona Sonoran and Excellon Resources.

Diversification Opportunities for Arizona Sonoran and Excellon Resources

0.3

Correlation Coefficient

Arizona Sonoran  Excellon Resources

Weak diversification

The 3 months correlation between Arizona and Excellon is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Arizona Sonoran Copper and Excellon Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excellon Resources 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 Excellon Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excellon Resources has no effect on the direction of Arizona Sonoran i.e., Arizona Sonoran and Excellon Resources go up and down completely randomly.

Pair Corralation between Arizona Sonoran and Excellon Resources

Assuming the 90 days trading horizon Arizona Sonoran Copper is expected to generate 0.34 times more return on investment than Excellon Resources. However, Arizona Sonoran Copper is 2.9 times less risky than Excellon Resources. It trades about 0.05 of its potential returns per unit of risk. Excellon Resources is currently generating about -0.02 per unit of risk. If you would invest  138.00  in Arizona Sonoran Copper on September 22, 2024 and sell it today you would earn a total of  2.00  from holding Arizona Sonoran Copper or generate 1.45% return on investment over 90 days.

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

Arizona Sonoran Copper  vs.  Excellon Resources

Arizona Sonoran Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arizona Sonoran Copper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Excellon Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Excellon Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Excellon Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Arizona Sonoran and Excellon Resources

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

The idea behind Arizona Sonoran Copper and Excellon 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.