Correlation Between Arizona Sonoran and Vista Gold

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

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

Diversification Opportunities for Arizona Sonoran and Vista Gold

0.73

Correlation Coefficient

Arizona Sonoran  Vista Gold

Poor diversification

The 3 months correlation between Arizona and Vista is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Arizona Sonoran Copper and Vista Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Gold and Arizona Sonoran 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 Sonoran Copper are associated (or correlated) with Vista Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Gold has no effect on the direction of Arizona Sonoran i.e., Arizona Sonoran and Vista Gold go up and down completely randomly.

Pair Corralation between Arizona Sonoran and Vista Gold

Assuming the 90 days trading horizon Arizona Sonoran Copper is expected to generate 0.74 times more return on investment than Vista Gold. However, Arizona Sonoran Copper is 1.35 times less risky than Vista Gold. It trades about 0.0 of its potential returns per unit of risk. Vista Gold is currently generating about -0.05 per unit of risk. If you would invest  148.00  in Arizona Sonoran Copper on September 17, 2024 and sell it today you would lose (2.00) from holding Arizona Sonoran Copper or give up 1.35% of portfolio value over 90 days.

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

Arizona Sonoran Copper  vs.  Vista Gold

Arizona Sonoran Copper

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vista Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vista Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Arizona Sonoran and Vista Gold

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

The idea behind Arizona Sonoran Copper and Vista Gold 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 Global Correlations module to find global opportunities by holding instruments from different markets.