Correlation Between Peel Mining and Arista Networks
Can any of the company-specific risk be diversified away by investing in both Peel Mining and Arista Networks 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 Peel Mining and Arista Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peel Mining Limited and Arista Networks, you can compare the effects of market volatilities on Peel Mining and Arista Networks 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 Peel Mining with a short position of Arista Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peel Mining and Arista Networks.
Diversification Opportunities for Peel Mining and Arista Networks
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Peel and Arista is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Peel Mining Limited and Arista Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arista Networks and Peel Mining 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 Peel Mining Limited are associated (or correlated) with Arista Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arista Networks has no effect on the direction of Peel Mining i.e., Peel Mining and Arista Networks go up and down completely randomly.
Pair Corralation between Peel Mining and Arista Networks
Assuming the 90 days horizon Peel Mining Limited is expected to generate 2.67 times more return on investment than Arista Networks. However, Peel Mining is 2.67 times more volatile than Arista Networks. It trades about 0.09 of its potential returns per unit of risk. Arista Networks is currently generating about 0.24 per unit of risk. If you would invest 4.90 in Peel Mining Limited on September 8, 2024 and sell it today you would earn a total of 1.50 from holding Peel Mining Limited or generate 30.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.48% |
Values | Daily Returns |
Peel Mining Limited vs. Arista Networks
Performance |
Timeline |
Peel Mining Limited |
Arista Networks |
Peel Mining and Arista Networks Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Peel Mining and Arista Networks
The main advantage of trading using opposite Peel Mining and Arista Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peel Mining position performs unexpectedly, Arista Networks 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 Arista Networks will offset losses from the drop in Arista Networks' long position.Peel Mining vs. Rio Tinto Group | Peel Mining vs. Liontown Resources Limited | Peel Mining vs. American Lithium Corp | Peel Mining vs. ADRIATIC METALS LS 013355 |
Arista Networks vs. GUARDANT HEALTH CL | Arista Networks vs. Cardinal Health | Arista Networks vs. KINGBOARD CHEMICAL | Arista Networks vs. SHIN ETSU CHEMICAL |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |