Correlation Between Cairn Homes and Metals Exploration
Can any of the company-specific risk be diversified away by investing in both Cairn Homes 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 Cairn Homes and Metals Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairn Homes PLC and Metals Exploration Plc, you can compare the effects of market volatilities on Cairn Homes 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 Cairn Homes with a short position of Metals Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and Metals Exploration.
Diversification Opportunities for Cairn Homes and Metals Exploration
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cairn and Metals is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes 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 Cairn Homes 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 Cairn Homes 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 Cairn Homes i.e., Cairn Homes and Metals Exploration go up and down completely randomly.
Pair Corralation between Cairn Homes and Metals Exploration
Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 0.46 times more return on investment than Metals Exploration. However, Cairn Homes PLC is 2.17 times less risky than Metals Exploration. It trades about -0.01 of its potential returns per unit of risk. Metals Exploration Plc is currently generating about -0.12 per unit of risk. If you would invest 19,160 in Cairn Homes PLC on November 4, 2024 and sell it today you would lose (160.00) from holding Cairn Homes PLC or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairn Homes PLC vs. Metals Exploration Plc
Performance |
| Timeline |
| Cairn Homes PLC |
| Metals Exploration Plc |
Cairn Homes and Metals Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and Metals Exploration
The main advantage of trading using opposite Cairn Homes and Metals Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes 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.| Cairn Homes vs. Rightmove PLC | Cairn Homes vs. Bioventix | Cairn Homes vs. Games Workshop Group | Cairn Homes vs. Auto Trader Group |
| Metals Exploration vs. Fortune Brands Home | Metals Exploration vs. Applied Materials | Metals Exploration vs. Gaming Realms plc | Metals Exploration vs. Synthomer plc |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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