Correlation Between Global Net and Empire Metals
Can any of the company-specific risk be diversified away by investing in both Global Net and Empire 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 Global Net and Empire Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Net Lease and Empire Metals Limited, you can compare the effects of market volatilities on Global Net and Empire 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 Global Net with a short position of Empire Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Empire Metals.
Diversification Opportunities for Global Net and Empire Metals
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and Empire is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Empire Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire Metals Limited and Global Net 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 Global Net Lease are associated (or correlated) with Empire Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire Metals Limited has no effect on the direction of Global Net i.e., Global Net and Empire Metals go up and down completely randomly.
Pair Corralation between Global Net and Empire Metals
Assuming the 90 days trading horizon Global Net Lease is expected to under-perform the Empire Metals. But the stock apears to be less risky and, when comparing its historical volatility, Global Net Lease is 1.81 times less risky than Empire Metals. The stock trades about -0.01 of its potential returns per unit of risk. The Empire Metals Limited is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 690.00 in Empire Metals Limited on October 12, 2024 and sell it today you would earn a total of 80.00 from holding Empire Metals Limited or generate 11.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Global Net Lease vs. Empire Metals Limited
Performance |
| Timeline |
| Global Net Lease |
| Empire Metals Limited |
Global Net and Empire Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Net and Empire Metals
The main advantage of trading using opposite Global Net and Empire Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net position performs unexpectedly, Empire 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 Empire Metals will offset losses from the drop in Empire Metals' long position.| Global Net vs. Wyndham Hotels Resorts | Global Net vs. GoldMining | Global Net vs. SBM Offshore NV | Global Net vs. Solstad Offshore ASA |
| Empire Metals vs. Allianz Technology Trust | Empire Metals vs. Global Net Lease | Empire Metals vs. Auction Technology Group | Empire Metals vs. Impax Environmental Markets |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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