Correlation Between Atlas Corp and Bell Copper

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

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

Diversification Opportunities for Atlas Corp and Bell Copper

-0.6

Correlation Coefficient

Atlas Corp  Bell Copper

Excellent diversification

The 3 months correlation between Atlas and Bell is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Corp and Bell Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bell Copper and Atlas Corp 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 Atlas Corp are associated (or correlated) with Bell Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bell Copper has no effect on the direction of Atlas Corp i.e., Atlas Corp and Bell Copper go up and down completely randomly.

Pair Corralation between Atlas Corp and Bell Copper

Assuming the 90 days horizon Atlas Corp is expected to generate 60.37 times less return on investment than Bell Copper. But when comparing it to its historical volatility, Atlas Corp is 64.44 times less risky than Bell Copper. It trades about 0.09 of its potential returns per unit of risk. Bell Copper is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2.86  in Bell Copper on September 19, 2024 and sell it today you would earn a total of  0.09  from holding Bell Copper or generate 3.15% return on investment over 90 days.

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

Atlas Corp  vs.  Bell Copper

Atlas Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Atlas Corp is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Bell Copper

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bell Copper are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Bell Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atlas Corp and Bell Copper

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

The idea behind Atlas Corp and Bell Copper 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.