Correlation Between Associated British and Empire Metals
Can any of the company-specific risk be diversified away by investing in both Associated British 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 Associated British and Empire Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Empire Metals Limited, you can compare the effects of market volatilities on Associated British 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 Associated British with a short position of Empire Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Empire Metals.
Diversification Opportunities for Associated British and Empire Metals
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Associated and Empire is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods 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 Associated British 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 Associated British Foods 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 Associated British i.e., Associated British and Empire Metals go up and down completely randomly.
Pair Corralation between Associated British and Empire Metals
Assuming the 90 days trading horizon Associated British Foods is expected to under-perform the Empire Metals. But the stock apears to be less risky and, when comparing its historical volatility, Associated British Foods is 2.84 times less risky than Empire Metals. The stock trades about -0.1 of its potential returns per unit of risk. The Empire Metals Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 740.00 in Empire Metals Limited on September 24, 2024 and sell it today you would lose (80.00) from holding Empire Metals Limited or give up 10.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Empire Metals Limited
Performance |
| Timeline |
| Associated British Foods |
| Empire Metals Limited |
Associated British and Empire Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Empire Metals
The main advantage of trading using opposite Associated British and Empire Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British 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.| Associated British vs. Aeorema Communications Plc | Associated British vs. MTI Wireless Edge | Associated British vs. British American Tobacco | Associated British vs. Molson Coors Beverage |
| Empire Metals vs. Givaudan SA | Empire Metals vs. Antofagasta PLC | Empire Metals vs. Ferrexpo PLC | Empire Metals vs. Atalaya Mining |
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 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.
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