Correlation Between Alpha Metallurgical and Invesco Taxable

Can any of the company-specific risk be diversified away by investing in both Alpha Metallurgical and Invesco Taxable 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 Alpha Metallurgical and Invesco Taxable into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alpha Metallurgical Resources and Invesco Taxable Municipal, you can compare the effects of market volatilities on Alpha Metallurgical and Invesco Taxable 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 Alpha Metallurgical with a short position of Invesco Taxable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Metallurgical and Invesco Taxable.

Diversification Opportunities for Alpha Metallurgical and Invesco Taxable

-0.38

Correlation Coefficient

Alpha Metallurgical  Invesco Taxable

Very good diversification

The 3 months correlation between Alpha and Invesco is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Metallurgical Resources and Invesco Taxable Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Taxable Municipal and Alpha Metallurgical 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 Alpha Metallurgical Resources are associated (or correlated) with Invesco Taxable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Taxable Municipal has no effect on the direction of Alpha Metallurgical i.e., Alpha Metallurgical and Invesco Taxable go up and down completely randomly.

Pair Corralation between Alpha Metallurgical and Invesco Taxable

Considering the 90-day investment horizon Alpha Metallurgical Resources is expected to generate 7.55 times more return on investment than Invesco Taxable. However, Alpha Metallurgical is 7.55 times more volatile than Invesco Taxable Municipal. It trades about 0.08 of its potential returns per unit of risk. Invesco Taxable Municipal is currently generating about -0.02 per unit of risk. If you would invest  21,782  in Alpha Metallurgical Resources on September 2, 2024 and sell it today you would earn a total of  2,775  from holding Alpha Metallurgical Resources or generate 12.74% return on investment over 90 days.

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

Alpha Metallurgical Resources  vs.  Invesco Taxable Municipal

Alpha Metallurgical

Risk-Adjusted Performance

6 of 100

Modest

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

Invesco Taxable Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Taxable Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Invesco Taxable is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alpha Metallurgical and Invesco Taxable

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

The idea behind Alpha Metallurgical Resources and Invesco Taxable Municipal 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.