Correlation Between Arizona Metals and Fidelity Minerals

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

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

Diversification Opportunities for Arizona Metals and Fidelity Minerals

-0.32

Correlation Coefficient

Arizona Metals  Fidelity Minerals

Very good diversification

The 3 months correlation between Arizona and Fidelity is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Arizona Metals Corp and Fidelity Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Minerals Corp and Arizona 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 Arizona Metals Corp are associated (or correlated) with Fidelity Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Minerals Corp has no effect on the direction of Arizona Metals i.e., Arizona Metals and Fidelity Minerals go up and down completely randomly.

Pair Corralation between Arizona Metals and Fidelity Minerals

Assuming the 90 days trading horizon Arizona Metals Corp is expected to under-perform the Fidelity Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Arizona Metals Corp is 2.54 times less risky than Fidelity Minerals. The stock trades about -0.01 of its potential returns per unit of risk. The Fidelity Minerals Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Fidelity Minerals Corp on September 12, 2024 and sell it today you would earn a total of  2.50  from holding Fidelity Minerals Corp or generate 100.0% return on investment over 90 days.

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

Arizona Metals Corp  vs.  Fidelity Minerals Corp

Arizona Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fidelity Minerals Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Minerals Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fidelity Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arizona Metals and Fidelity Minerals

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

The idea behind Arizona Metals Corp and Fidelity Minerals Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.