Correlation Between Big Ridge and Arizona Sonoran

Can any of the company-specific risk be diversified away by investing in both Big Ridge and Arizona Sonoran 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 Big Ridge and Arizona Sonoran into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Big Ridge and Arizona Sonoran

-0.48

Correlation Coefficient

Big Ridge  Arizona Sonoran

Very good diversification

The 3 months correlation between Big and Arizona is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Big Ridge Gold and Arizona Sonoran Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arizona Sonoran Copper and Big Ridge 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 Big Ridge Gold are associated (or correlated) with Arizona Sonoran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arizona Sonoran Copper has no effect on the direction of Big Ridge i.e., Big Ridge and Arizona Sonoran go up and down completely randomly.

Pair Corralation between Big Ridge and Arizona Sonoran

Assuming the 90 days trading horizon Big Ridge Gold is expected to under-perform the Arizona Sonoran. In addition to that, Big Ridge is 1.35 times more volatile than Arizona Sonoran Copper. It trades about -0.05 of its total potential returns per unit of risk. Arizona Sonoran Copper is currently generating about 0.13 per unit of volatility. If you would invest  147.00  in Arizona Sonoran Copper on December 9, 2024 and sell it today you would earn a total of  42.00  from holding Arizona Sonoran Copper or generate 28.57% return on investment over 90 days.

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

Big Ridge Gold  vs.  Arizona Sonoran Copper

Big Ridge Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Big Ridge Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Arizona Sonoran Copper

Risk-Adjusted Performance

OK

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

Pair Trading with Big Ridge and Arizona Sonoran

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

The idea behind Big Ridge Gold and Arizona Sonoran 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.