Correlation Between ARC Resources and Liberty Gold
Can any of the company-specific risk be diversified away by investing in both ARC Resources and Liberty Gold 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 ARC Resources and Liberty Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARC Resources and Liberty Gold Corp, you can compare the effects of market volatilities on ARC Resources and Liberty Gold 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 ARC Resources with a short position of Liberty Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARC Resources and Liberty Gold.
Diversification Opportunities for ARC Resources and Liberty Gold
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ARC and Liberty is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding ARC Resources and Liberty Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Gold Corp and ARC Resources 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 ARC Resources are associated (or correlated) with Liberty Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Gold Corp has no effect on the direction of ARC Resources i.e., ARC Resources and Liberty Gold go up and down completely randomly.
Pair Corralation between ARC Resources and Liberty Gold
Assuming the 90 days trading horizon ARC Resources is expected to generate 0.44 times more return on investment than Liberty Gold. However, ARC Resources is 2.27 times less risky than Liberty Gold. It trades about 0.06 of its potential returns per unit of risk. Liberty Gold Corp is currently generating about -0.02 per unit of risk. If you would invest 1,531 in ARC Resources on September 23, 2024 and sell it today you would earn a total of 900.00 from holding ARC Resources or generate 58.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ARC Resources vs. Liberty Gold Corp
Performance |
Timeline |
ARC Resources |
Liberty Gold Corp |
ARC Resources and Liberty Gold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ARC Resources and Liberty Gold
The main advantage of trading using opposite ARC Resources and Liberty Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARC Resources position performs unexpectedly, Liberty Gold 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 Liberty Gold will offset losses from the drop in Liberty Gold's long position.ARC Resources vs. Tourmaline Oil Corp | ARC Resources vs. Whitecap Resources | ARC Resources vs. MEG Energy Corp | ARC Resources vs. Vermilion Energy |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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