Correlation Between Arizona Gold and UPS CDR

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

Diversification Opportunities for Arizona Gold and UPS CDR

-0.5

Correlation Coefficient

Arizona Gold  UPS CDR

Very good diversification

The 3 months correlation between Arizona and UPS is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Arizona Gold Silver and UPS CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPS CDR 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 UPS CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPS CDR has no effect on the direction of Arizona Gold i.e., Arizona Gold and UPS CDR go up and down completely randomly.

Pair Corralation between Arizona Gold and UPS CDR

Assuming the 90 days horizon Arizona Gold Silver is expected to generate 1.98 times more return on investment than UPS CDR. However, Arizona Gold is 1.98 times more volatile than UPS CDR. It trades about 0.1 of its potential returns per unit of risk. UPS CDR is currently generating about -0.11 per unit of risk. If you would invest  45.00  in Arizona Gold Silver on October 6, 2024 and sell it today you would earn a total of  5.00  from holding Arizona Gold Silver or generate 11.11% return on investment over 90 days.

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

Arizona Gold Silver  vs.  UPS CDR

Arizona Gold Silver

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arizona Gold Silver are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Arizona Gold showed solid returns over the last few months and may actually be approaching a breakup point.

UPS CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UPS CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, UPS CDR is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Arizona Gold and UPS CDR

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

The idea behind Arizona Gold Silver and UPS CDR 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.