Correlation Between American States and ARDAGH METAL

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

By analyzing existing cross correlation between American States Water and ARDAGH METAL PACDL 0001, you can compare the effects of market volatilities on American States and ARDAGH METAL 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 American States with a short position of ARDAGH METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of American States and ARDAGH METAL.

Diversification Opportunities for American States and ARDAGH METAL

0.71

Correlation Coefficient

American States  ARDAGH METAL

Poor diversification

The 3 months correlation between American and ARDAGH is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding American States Water and ARDAGH METAL PACDL 0001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARDAGH METAL PACDL and American States 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 American States Water are associated (or correlated) with ARDAGH METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARDAGH METAL PACDL has no effect on the direction of American States i.e., American States and ARDAGH METAL go up and down completely randomly.

Pair Corralation between American States and ARDAGH METAL

Assuming the 90 days trading horizon American States Water is expected to generate 0.44 times more return on investment than ARDAGH METAL. However, American States Water is 2.28 times less risky than ARDAGH METAL. It trades about 0.03 of its potential returns per unit of risk. ARDAGH METAL PACDL 0001 is currently generating about -0.01 per unit of risk. If you would invest  6,666  in American States Water on October 24, 2024 and sell it today you would earn a total of  454.00  from holding American States Water or generate 6.81% return on investment over 90 days.

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

American States Water  vs.  ARDAGH METAL PACDL 0001

American States Water

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American States Water has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, American States is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ARDAGH METAL PACDL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARDAGH METAL PACDL 0001 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with American States and ARDAGH METAL

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

The idea behind American States Water and ARDAGH METAL PACDL 0001 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.