Correlation Between Blue Sky and Anfield Resources

Can any of the company-specific risk be diversified away by investing in both Blue Sky and Anfield Resources 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 Blue Sky and Anfield Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blue Sky Uranium and Anfield Resources, you can compare the effects of market volatilities on Blue Sky and Anfield Resources 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 Blue Sky with a short position of Anfield Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Sky and Anfield Resources.

Diversification Opportunities for Blue Sky and Anfield Resources

0.64

Correlation Coefficient

Blue Sky  Anfield Resources

Poor diversification

The 3 months correlation between Blue and Anfield is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Blue Sky Uranium and Anfield Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anfield Resources and Blue Sky 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 Blue Sky Uranium are associated (or correlated) with Anfield Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anfield Resources has no effect on the direction of Blue Sky i.e., Blue Sky and Anfield Resources go up and down completely randomly.

Pair Corralation between Blue Sky and Anfield Resources

Assuming the 90 days horizon Blue Sky Uranium is expected to under-perform the Anfield Resources. But the stock apears to be less risky and, when comparing its historical volatility, Blue Sky Uranium is 1.2 times less risky than Anfield Resources. The stock trades about -0.07 of its potential returns per unit of risk. The Anfield Resources is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Anfield Resources on December 26, 2024 and sell it today you would lose (2.50) from holding Anfield Resources or give up 27.78% of portfolio value over 90 days.

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

Blue Sky Uranium  vs.  Anfield Resources

Blue Sky Uranium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blue Sky Uranium 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.

Anfield Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anfield Resources 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.

Pair Trading with Blue Sky and Anfield Resources

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

The idea behind Blue Sky Uranium and Anfield 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.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.