Correlation Between Falcon Energy and Aztec Minerals

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

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

Diversification Opportunities for Falcon Energy and Aztec Minerals

0.11

Correlation Coefficient

Falcon Energy  Aztec Minerals

Average diversification

The 3 months correlation between Falcon and Aztec is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials and Aztec Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aztec Minerals Corp and Falcon Energy 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 Falcon Energy Materials are associated (or correlated) with Aztec Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aztec Minerals Corp has no effect on the direction of Falcon Energy i.e., Falcon Energy and Aztec Minerals go up and down completely randomly.

Pair Corralation between Falcon Energy and Aztec Minerals

Assuming the 90 days trading horizon Falcon Energy Materials is expected to under-perform the Aztec Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Falcon Energy Materials is 1.6 times less risky than Aztec Minerals. The stock trades about -0.47 of its potential returns per unit of risk. The Aztec Minerals Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Aztec Minerals Corp on September 26, 2024 and sell it today you would lose (2.00) from holding Aztec Minerals Corp or give up 9.52% of portfolio value over 90 days.

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

Falcon Energy Materials  vs.  Aztec Minerals Corp

Falcon Energy Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Energy Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Falcon Energy is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Aztec Minerals Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aztec Minerals Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Aztec Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Falcon Energy and Aztec Minerals

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

The idea behind Falcon Energy Materials and Aztec 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.