Correlation Between Arizona Sonoran and Aguila American

Can any of the company-specific risk be diversified away by investing in both Arizona Sonoran and Aguila American 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 Aguila American 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 Aguila American Gold, you can compare the effects of market volatilities on Arizona Sonoran and Aguila American 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 Aguila American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arizona Sonoran and Aguila American.

Diversification Opportunities for Arizona Sonoran and Aguila American

0.03

Correlation Coefficient

Arizona Sonoran  Aguila American

Significant diversification

The 3 months correlation between Arizona and Aguila is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Arizona Sonoran Copper and Aguila American Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aguila American 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 Aguila American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aguila American Gold has no effect on the direction of Arizona Sonoran i.e., Arizona Sonoran and Aguila American go up and down completely randomly.

Pair Corralation between Arizona Sonoran and Aguila American

Assuming the 90 days horizon Arizona Sonoran Copper is expected to under-perform the Aguila American. But the otc stock apears to be less risky and, when comparing its historical volatility, Arizona Sonoran Copper is 1.66 times less risky than Aguila American. The otc stock trades about -0.06 of its potential returns per unit of risk. The Aguila American Gold is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Aguila American Gold on September 5, 2024 and sell it today you would earn a total of  6.00  from holding Aguila American Gold or generate 27.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	56.25%
Values	Daily Returns

Arizona Sonoran Copper  vs.  Aguila American 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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Aguila American Gold

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Aguila American Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Aguila American reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arizona Sonoran and Aguila American

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

The idea behind Arizona Sonoran Copper and Aguila American 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..