Correlation Between DISTRICT METALS and ArcBest

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

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

Diversification Opportunities for DISTRICT METALS and ArcBest

-0.5

Correlation Coefficient

DISTRICT METALS  ArcBest

Very good diversification

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

Pair Corralation between DISTRICT METALS and ArcBest

Assuming the 90 days trading horizon DISTRICT METALS is expected to generate 3.05 times more return on investment than ArcBest. However, DISTRICT METALS is 3.05 times more volatile than ArcBest. It trades about 0.08 of its potential returns per unit of risk. ArcBest is currently generating about 0.03 per unit of risk. If you would invest  5.34  in DISTRICT METALS on September 28, 2024 and sell it today you would earn a total of  18.66  from holding DISTRICT METALS or generate 349.44% return on investment over 90 days.

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

DISTRICT METALS  vs.  ArcBest

DISTRICT METALS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DISTRICT METALS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DISTRICT METALS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ArcBest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ArcBest has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ArcBest is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DISTRICT METALS and ArcBest

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

The idea behind DISTRICT METALS and ArcBest 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.