Correlation Between Cornish Metals and Empire Metals
Can any of the company-specific risk be diversified away by investing in both Cornish Metals 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 Cornish Metals and Empire Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornish Metals and Empire Metals Limited, you can compare the effects of market volatilities on Cornish Metals 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 Cornish Metals with a short position of Empire Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornish Metals and Empire Metals.
Diversification Opportunities for Cornish Metals and Empire Metals
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cornish and Empire is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals 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 Cornish 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 Cornish Metals 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 Cornish Metals i.e., Cornish Metals and Empire Metals go up and down completely randomly.
Pair Corralation between Cornish Metals and Empire Metals
Assuming the 90 days trading horizon Cornish Metals is expected to under-perform the Empire Metals. But the stock apears to be less risky and, when comparing its historical volatility, Cornish Metals is 1.53 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 0.07 of returns per unit of risk over similar time horizon. If you would invest 170.00 in Empire Metals Limited on August 30, 2024 and sell it today you would earn a total of 420.00 from holding Empire Metals Limited or generate 247.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cornish Metals vs. Empire Metals Limited
Performance |
| Timeline |
| Cornish Metals |
| Empire Metals Limited |
Cornish Metals and Empire Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornish Metals and Empire Metals
The main advantage of trading using opposite Cornish Metals and Empire Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornish Metals 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.| Cornish Metals vs. DFS Furniture PLC | Cornish Metals vs. American Homes 4 | Cornish Metals vs. Fortune Brands Home | Cornish Metals vs. Synthomer plc |
| Empire Metals vs. Air Products Chemicals | Empire Metals vs. Sealed Air Corp | Empire Metals vs. Pentair PLC | Empire Metals vs. Advanced Medical Solutions |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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