Correlation Between US Global and Aduro Clean

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

By analyzing existing cross correlation between US Global Investors and Aduro Clean Technologies, you can compare the effects of market volatilities on US Global and Aduro Clean 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 US Global with a short position of Aduro Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and Aduro Clean.

Diversification Opportunities for US Global and Aduro Clean

-0.25

Correlation Coefficient

US Global  Aduro Clean

Very good diversification

The 3 months correlation between GROW and Aduro is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding US Global Investors and Aduro Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aduro Clean Technologies and US Global 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 US Global Investors are associated (or correlated) with Aduro Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aduro Clean Technologies has no effect on the direction of US Global i.e., US Global and Aduro Clean go up and down completely randomly.

Pair Corralation between US Global and Aduro Clean

Given the investment horizon of 90 days US Global Investors is expected to generate 0.16 times more return on investment than Aduro Clean. However, US Global Investors is 6.25 times less risky than Aduro Clean. It trades about 0.07 of its potential returns per unit of risk. Aduro Clean Technologies is currently generating about -0.04 per unit of risk. If you would invest  241.00  in US Global Investors on October 24, 2024 and sell it today you would earn a total of  2.00  from holding US Global Investors or generate 0.83% return on investment over 90 days.

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

US Global Investors  vs.  Aduro Clean Technologies

US Global Investors

Risk-Adjusted Performance

0 of 100

Insignificant

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

Aduro Clean Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aduro Clean Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Aduro Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with US Global and Aduro Clean

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

The idea behind US Global Investors and Aduro Clean Technologies 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.