Correlation Between IDEX Metals and Arbor Metals

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

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

Diversification Opportunities for IDEX Metals and Arbor Metals

-0.24

Correlation Coefficient

IDEX Metals  Arbor Metals

Very good diversification

The 3 months correlation between IDEX and Arbor is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding IDEX Metals Corp and Arbor Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Metals Corp and IDEX 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 IDEX Metals Corp are associated (or correlated) with Arbor Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Metals Corp has no effect on the direction of IDEX Metals i.e., IDEX Metals and Arbor Metals go up and down completely randomly.

Pair Corralation between IDEX Metals and Arbor Metals

Assuming the 90 days trading horizon IDEX Metals Corp is expected to under-perform the Arbor Metals. But the stock apears to be less risky and, when comparing its historical volatility, IDEX Metals Corp is 1.03 times less risky than Arbor Metals. The stock trades about -0.04 of its potential returns per unit of risk. The Arbor Metals Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Arbor Metals Corp on May 5, 2025 and sell it today you would lose (1.00) from holding Arbor Metals Corp or give up 4.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	60.94%
Values	Daily Returns

IDEX Metals Corp  vs.  Arbor Metals Corp

IDEX Metals Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days IDEX Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Arbor Metals Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with IDEX Metals and Arbor Metals

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

The idea behind IDEX Metals Corp and Arbor Metals 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.