Correlation Between T2 Metals and Arizona Sonoran

Can any of the company-specific risk be diversified away by investing in both T2 Metals and Arizona Sonoran 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 T2 Metals and Arizona Sonoran into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between T2 Metals Corp and Arizona Sonoran Copper, you can compare the effects of market volatilities on T2 Metals and Arizona Sonoran 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 T2 Metals with a short position of Arizona Sonoran. Check out your portfolio center. Please also check ongoing floating volatility patterns of T2 Metals and Arizona Sonoran.

Diversification Opportunities for T2 Metals and Arizona Sonoran

-0.12

Correlation Coefficient

T2 Metals  Arizona Sonoran

Good diversification

The 3 months correlation between TWO and Arizona is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding T2 Metals Corp and Arizona Sonoran Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arizona Sonoran Copper and T2 Metals 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 T2 Metals Corp are associated (or correlated) with Arizona Sonoran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arizona Sonoran Copper has no effect on the direction of T2 Metals i.e., T2 Metals and Arizona Sonoran go up and down completely randomly.

Pair Corralation between T2 Metals and Arizona Sonoran

Assuming the 90 days horizon T2 Metals Corp is expected to generate 1.04 times more return on investment than Arizona Sonoran. However, T2 Metals is 1.04 times more volatile than Arizona Sonoran Copper. It trades about 0.07 of its potential returns per unit of risk. Arizona Sonoran Copper is currently generating about -0.11 per unit of risk. If you would invest  29.00  in T2 Metals Corp on June 9, 2024 and sell it today you would earn a total of  1.00  from holding T2 Metals Corp or generate 3.45% return on investment over 90 days.

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

T2 Metals Corp  vs.  Arizona Sonoran Copper

T2 Metals Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in T2 Metals Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, T2 Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Arizona Sonoran Copper

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arizona Sonoran Copper are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Arizona Sonoran displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with T2 Metals and Arizona Sonoran

The main advantage of trading using opposite T2 Metals and Arizona Sonoran positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T2 Metals position performs unexpectedly, Arizona Sonoran 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 Arizona Sonoran will offset losses from the drop in Arizona Sonoran's long position.

The idea behind T2 Metals Corp and Arizona Sonoran Copper 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.