Correlation Between Atlantic Wind and American Security

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

By analyzing existing cross correlation between Atlantic Wind Solar and American Security Resources, you can compare the effects of market volatilities on Atlantic Wind and American Security 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 Atlantic Wind with a short position of American Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlantic Wind and American Security.

Diversification Opportunities for Atlantic Wind and American Security

0.32

Correlation Coefficient

Atlantic Wind  American Security

Weak diversification

The 3 months correlation between Atlantic and American is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Atlantic Wind Solar and American Security Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Security and Atlantic Wind 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 Atlantic Wind Solar are associated (or correlated) with American Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Security has no effect on the direction of Atlantic Wind i.e., Atlantic Wind and American Security go up and down completely randomly.

Pair Corralation between Atlantic Wind and American Security

Given the investment horizon of 90 days Atlantic Wind is expected to generate 2.03 times less return on investment than American Security. But when comparing it to its historical volatility, Atlantic Wind Solar is 3.33 times less risky than American Security. It trades about 0.16 of its potential returns per unit of risk. American Security Resources is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.01  in American Security Resources on December 30, 2024 and sell it today you would earn a total of  0.00  from holding American Security Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Atlantic Wind Solar  vs.  American Security Resources

Atlantic Wind Solar

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atlantic Wind Solar are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Atlantic Wind disclosed solid returns over the last few months and may actually be approaching a breakup point.

American Security

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Security Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, American Security exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atlantic Wind and American Security

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

The idea behind Atlantic Wind Solar and American Security 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.