Correlation Between Arizona Gold and Imperial Oil

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Can any of the company-specific risk be diversified away by investing in both Arizona Gold and Imperial Oil 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 Gold and Imperial Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arizona Gold Silver and Imperial Oil, you can compare the effects of market volatilities on Arizona Gold and Imperial Oil 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 Gold with a short position of Imperial Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arizona Gold and Imperial Oil.

Diversification Opportunities for Arizona Gold and Imperial Oil

ArizonaImperialDiversified AwayArizonaImperialDiversified Away100%
-0.45
  Correlation Coefficient

Very good diversification

The 3 months correlation between Arizona and Imperial is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Arizona Gold Silver and Imperial Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Oil and Arizona Gold 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 Gold Silver are associated (or correlated) with Imperial Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Oil has no effect on the direction of Arizona Gold i.e., Arizona Gold and Imperial Oil go up and down completely randomly.

Pair Corralation between Arizona Gold and Imperial Oil

Assuming the 90 days horizon Arizona Gold Silver is expected to under-perform the Imperial Oil. In addition to that, Arizona Gold is 2.81 times more volatile than Imperial Oil. It trades about -0.03 of its total potential returns per unit of risk. Imperial Oil is currently generating about -0.05 per unit of volatility. If you would invest  10,529  in Imperial Oil on November 17, 2024 and sell it today you would lose (704.00) from holding Imperial Oil or give up 6.69% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Arizona Gold Silver  vs.  Imperial Oil

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025 -15-10-5051015
JavaScript chart by amCharts 3.21.15AZS IMO
       Timeline  
Arizona Gold Silver 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Arizona Gold Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.250.30.350.40.450.5
Imperial Oil 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Imperial Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Imperial Oil is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb9095100105

Arizona Gold and Imperial Oil Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.11-6.08-4.04-2.0-0.031.933.935.947.949.94 0.020.040.060.080.100.12
JavaScript chart by amCharts 3.21.15AZS IMO
       Returns  

Pair Trading with Arizona Gold and Imperial Oil

The main advantage of trading using opposite Arizona Gold and Imperial Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arizona Gold position performs unexpectedly, Imperial Oil 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 Imperial Oil will offset losses from the drop in Imperial Oil's long position.
The idea behind Arizona Gold Silver and Imperial Oil 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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