Correlation Between Avalon Advanced and Medical Facilities
Can any of the company-specific risk be diversified away by investing in both Avalon Advanced and Medical Facilities 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 Avalon Advanced and Medical Facilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avalon Advanced Materials and Medical Facilities, you can compare the effects of market volatilities on Avalon Advanced and Medical Facilities 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 Avalon Advanced with a short position of Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avalon Advanced and Medical Facilities.
Diversification Opportunities for Avalon Advanced and Medical Facilities
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avalon and Medical is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Avalon Advanced Materials and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities and Avalon Advanced 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 Avalon Advanced Materials are associated (or correlated) with Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of Avalon Advanced i.e., Avalon Advanced and Medical Facilities go up and down completely randomly.
Pair Corralation between Avalon Advanced and Medical Facilities
Assuming the 90 days trading horizon Avalon Advanced Materials is expected to generate 10.05 times more return on investment than Medical Facilities. However, Avalon Advanced is 10.05 times more volatile than Medical Facilities. It trades about 0.1 of its potential returns per unit of risk. Medical Facilities is currently generating about 0.14 per unit of risk. If you would invest 4.00 in Avalon Advanced Materials on August 30, 2025 and sell it today you would earn a total of 2.00 from holding Avalon Advanced Materials or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avalon Advanced Materials vs. Medical Facilities
Performance |
| Timeline |
| Avalon Advanced Materials |
| Medical Facilities |
Avalon Advanced and Medical Facilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avalon Advanced and Medical Facilities
The main advantage of trading using opposite Avalon Advanced and Medical Facilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avalon Advanced position performs unexpectedly, Medical Facilities 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 Medical Facilities will offset losses from the drop in Medical Facilities' long position.| Avalon Advanced vs. First Majestic Silver | Avalon Advanced vs. Ivanhoe Energy | Avalon Advanced vs. Orezone Gold Corp | Avalon Advanced vs. Faraday Copper Corp |
| Medical Facilities vs. Metalero Mining Corp | Medical Facilities vs. Magna Mining | Medical Facilities vs. CubicFarm Systems Corp | Medical Facilities vs. Getty Copper |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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