Correlation Between Defense Metals and Altagas Cum

Can any of the company-specific risk be diversified away by investing in both Defense Metals and Altagas Cum 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 Defense Metals and Altagas Cum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Defense Metals Corp and Altagas Cum Red, you can compare the effects of market volatilities on Defense Metals and Altagas Cum 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 Defense Metals with a short position of Altagas Cum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defense Metals and Altagas Cum.

Diversification Opportunities for Defense Metals and Altagas Cum

0.6

Correlation Coefficient

Defense Metals  Altagas Cum

Poor diversification

The 3 months correlation between Defense and Altagas is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Defense Metals Corp and Altagas Cum Red in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altagas Cum Red and Defense Metals 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 Defense Metals Corp are associated (or correlated) with Altagas Cum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altagas Cum Red has no effect on the direction of Defense Metals i.e., Defense Metals and Altagas Cum go up and down completely randomly.

Pair Corralation between Defense Metals and Altagas Cum

Assuming the 90 days trading horizon Defense Metals Corp is expected to generate 14.46 times more return on investment than Altagas Cum. However, Defense Metals is 14.46 times more volatile than Altagas Cum Red. It trades about 0.29 of its potential returns per unit of risk. Altagas Cum Red is currently generating about 0.22 per unit of risk. If you would invest  10.00  in Defense Metals Corp on September 25, 2024 and sell it today you would earn a total of  6.00  from holding Defense Metals Corp or generate 60.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Defense Metals Corp  vs.  Altagas Cum Red

Defense Metals Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Defense Metals Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Defense Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Altagas Cum Red

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altagas Cum Red are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Altagas Cum is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Defense Metals and Altagas Cum

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

The idea behind Defense Metals Corp and Altagas Cum Red 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..