Correlation Between Capital Metals and Metals Exploration
Can any of the company-specific risk be diversified away by investing in both Capital Metals and Metals Exploration 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 Capital Metals and Metals Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Metals PLC and Metals Exploration Plc, you can compare the effects of market volatilities on Capital Metals and Metals Exploration 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 Capital Metals with a short position of Metals Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Metals and Metals Exploration.
Diversification Opportunities for Capital Metals and Metals Exploration
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capital and Metals is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Capital Metals PLC and Metals Exploration Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Exploration Plc and Capital 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 Capital Metals PLC are associated (or correlated) with Metals Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Exploration Plc has no effect on the direction of Capital Metals i.e., Capital Metals and Metals Exploration go up and down completely randomly.
Pair Corralation between Capital Metals and Metals Exploration
Assuming the 90 days trading horizon Capital Metals PLC is expected to under-perform the Metals Exploration. But the stock apears to be less risky and, when comparing its historical volatility, Capital Metals PLC is 1.47 times less risky than Metals Exploration. The stock trades about -0.33 of its potential returns per unit of risk. The Metals Exploration Plc is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 515.00 in Metals Exploration Plc on October 12, 2024 and sell it today you would earn a total of 90.00 from holding Metals Exploration Plc or generate 17.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Metals PLC vs. Metals Exploration Plc
Performance |
| Timeline |
| Capital Metals PLC |
| Metals Exploration Plc |
Capital Metals and Metals Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Metals and Metals Exploration
The main advantage of trading using opposite Capital Metals and Metals Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Metals position performs unexpectedly, Metals Exploration 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 Metals Exploration will offset losses from the drop in Metals Exploration's long position.| Capital Metals vs. Givaudan SA | Capital Metals vs. Antofagasta PLC | Capital Metals vs. Ferrexpo PLC | Capital Metals vs. Atalaya Mining |
| Metals Exploration vs. Dalata Hotel Group | Metals Exploration vs. iShares Physical Silver | Metals Exploration vs. First Majestic Silver | Metals Exploration vs. Coeur 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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