Correlation Between ValOre Metals and BRIT AMER

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

By analyzing existing cross correlation between ValOre Metals Corp and BRIT AMER TOBACCO, you can compare the effects of market volatilities on ValOre Metals and BRIT AMER 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 ValOre Metals with a short position of BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of ValOre Metals and BRIT AMER.

Diversification Opportunities for ValOre Metals and BRIT AMER

-0.2

Correlation Coefficient

ValOre Metals  BRIT AMER

Good diversification

The 3 months correlation between ValOre and BRIT is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding ValOre Metals Corp and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO and ValOre 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 ValOre Metals Corp are associated (or correlated) with BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of ValOre Metals i.e., ValOre Metals and BRIT AMER go up and down completely randomly.

Pair Corralation between ValOre Metals and BRIT AMER

Assuming the 90 days trading horizon ValOre Metals Corp is expected to generate 17.75 times more return on investment than BRIT AMER. However, ValOre Metals is 17.75 times more volatile than BRIT AMER TOBACCO. It trades about 0.06 of its potential returns per unit of risk. BRIT AMER TOBACCO is currently generating about 0.03 per unit of risk. If you would invest  18.00  in ValOre Metals Corp on October 11, 2024 and sell it today you would lose (13.20) from holding ValOre Metals Corp or give up 73.33% of portfolio value over 90 days.

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

ValOre Metals Corp  vs.  BRIT AMER TOBACCO

ValOre Metals Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ValOre Metals Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ValOre Metals reported solid returns over the last few months and may actually be approaching a breakup point.

BRIT AMER TOBACCO

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BRIT AMER TOBACCO are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BRIT AMER unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ValOre Metals and BRIT AMER

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

The idea behind ValOre Metals Corp and BRIT AMER TOBACCO 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.