Correlation Between CAP LEASE and Neometals
Can any of the company-specific risk be diversified away by investing in both CAP LEASE and Neometals 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 CAP LEASE and Neometals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAP LEASE AVIATION and Neometals, you can compare the effects of market volatilities on CAP LEASE and Neometals 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 CAP LEASE with a short position of Neometals. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAP LEASE and Neometals.
Diversification Opportunities for CAP LEASE and Neometals
Significant diversification
The 3 months correlation between CAP and Neometals is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding CAP LEASE AVIATION and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals and CAP LEASE 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 CAP LEASE AVIATION are associated (or correlated) with Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of CAP LEASE i.e., CAP LEASE and Neometals go up and down completely randomly.
Pair Corralation between CAP LEASE and Neometals
Assuming the 90 days trading horizon CAP LEASE AVIATION is expected to under-perform the Neometals. But the stock apears to be less risky and, when comparing its historical volatility, CAP LEASE AVIATION is 2.04 times less risky than Neometals. The stock trades about -0.21 of its potential returns per unit of risk. The Neometals is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 550.00 in Neometals on September 2, 2024 and sell it today you would lose (75.00) from holding Neometals or give up 13.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAP LEASE AVIATION vs. Neometals
Performance |
| Timeline |
| CAP LEASE AVIATION |
| Neometals |
CAP LEASE and Neometals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAP LEASE and Neometals
The main advantage of trading using opposite CAP LEASE and Neometals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAP LEASE position performs unexpectedly, Neometals 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 Neometals will offset losses from the drop in Neometals' long position.| CAP LEASE vs. Global Net Lease | CAP LEASE vs. Neometals | CAP LEASE vs. Jacquet Metal Service | CAP LEASE vs. GreenX Metals |
| Neometals vs. Jacquet Metal Service | Neometals vs. AfriTin Mining | Neometals vs. Norman Broadbent Plc | Neometals vs. Darden Restaurants |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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