Correlation Between ExGen Resources and Atrium Mortgage

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

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

Diversification Opportunities for ExGen Resources and Atrium Mortgage

0.11

Correlation Coefficient

ExGen Resources  Atrium Mortgage

Average diversification

The 3 months correlation between ExGen and Atrium is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding ExGen Resources and Atrium Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atrium Mortgage Inve and ExGen Resources 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 ExGen Resources are associated (or correlated) with Atrium Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atrium Mortgage Inve has no effect on the direction of ExGen Resources i.e., ExGen Resources and Atrium Mortgage go up and down completely randomly.

Pair Corralation between ExGen Resources and Atrium Mortgage

Assuming the 90 days horizon ExGen Resources is expected to under-perform the Atrium Mortgage. In addition to that, ExGen Resources is 10.87 times more volatile than Atrium Mortgage Investment. It trades about -0.01 of its total potential returns per unit of risk. Atrium Mortgage Investment is currently generating about -0.01 per unit of volatility. If you would invest  1,108  in Atrium Mortgage Investment on October 25, 2024 and sell it today you would lose (7.00) from holding Atrium Mortgage Investment or give up 0.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

ExGen Resources  vs.  Atrium Mortgage Investment

ExGen Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ExGen Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ExGen Resources is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Atrium Mortgage Inve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atrium Mortgage Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Atrium Mortgage is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ExGen Resources and Atrium Mortgage

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

The idea behind ExGen Resources and Atrium Mortgage Investment 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..