Correlation Between Eagle Plains and Aston Martin

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

By analyzing existing cross correlation between Eagle Plains Resources and Aston Martin Lagonda, you can compare the effects of market volatilities on Eagle Plains and Aston Martin 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 Eagle Plains with a short position of Aston Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Plains and Aston Martin.

Diversification Opportunities for Eagle Plains and Aston Martin

0.05

Correlation Coefficient

Eagle Plains  Aston Martin

Significant diversification

The 3 months correlation between Eagle and Aston is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Plains Resources and Aston Martin Lagonda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Martin Lagonda and Eagle Plains 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 Eagle Plains Resources are associated (or correlated) with Aston Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Martin Lagonda has no effect on the direction of Eagle Plains i.e., Eagle Plains and Aston Martin go up and down completely randomly.

Pair Corralation between Eagle Plains and Aston Martin

Assuming the 90 days horizon Eagle Plains Resources is expected to generate 4.34 times more return on investment than Aston Martin. However, Eagle Plains is 4.34 times more volatile than Aston Martin Lagonda. It trades about 0.01 of its potential returns per unit of risk. Aston Martin Lagonda is currently generating about 0.0 per unit of risk. If you would invest  10.00  in Eagle Plains Resources on October 24, 2024 and sell it today you would lose (3.00) from holding Eagle Plains Resources or give up 30.0% of portfolio value over 90 days.

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

Eagle Plains Resources  vs.  Aston Martin Lagonda

Eagle Plains Resources

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Plains Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Eagle Plains may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Aston Martin Lagonda

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aston Martin Lagonda has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Aston Martin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eagle Plains and Aston Martin

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

The idea behind Eagle Plains Resources and Aston Martin Lagonda 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.