Correlation Between Cornish Metals and Ithaca Energy
Can any of the company-specific risk be diversified away by investing in both Cornish Metals and Ithaca Energy 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 Ithaca Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornish Metals and Ithaca Energy PLC, you can compare the effects of market volatilities on Cornish Metals and Ithaca Energy 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 Ithaca Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornish Metals and Ithaca Energy.
Diversification Opportunities for Cornish Metals and Ithaca Energy
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cornish and Ithaca is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals and Ithaca Energy PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ithaca Energy PLC 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 Ithaca Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ithaca Energy PLC has no effect on the direction of Cornish Metals i.e., Cornish Metals and Ithaca Energy go up and down completely randomly.
Pair Corralation between Cornish Metals and Ithaca Energy
Assuming the 90 days trading horizon Cornish Metals is expected to generate 1.5 times more return on investment than Ithaca Energy. However, Cornish Metals is 1.5 times more volatile than Ithaca Energy PLC. It trades about -0.01 of its potential returns per unit of risk. Ithaca Energy PLC is currently generating about -0.03 per unit of risk. If you would invest 1,475 in Cornish Metals on September 3, 2024 and sell it today you would lose (625.00) from holding Cornish Metals or give up 42.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Cornish Metals vs. Ithaca Energy PLC
Performance |
| Timeline |
| Cornish Metals |
| Ithaca Energy PLC |
Cornish Metals and Ithaca Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornish Metals and Ithaca Energy
The main advantage of trading using opposite Cornish Metals and Ithaca Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornish Metals position performs unexpectedly, Ithaca Energy 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 Ithaca Energy will offset losses from the drop in Ithaca Energy's long position.The idea behind Cornish Metals and Ithaca Energy PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Ithaca Energy vs. Bisichi Mining PLC | Ithaca Energy vs. Monster Beverage Corp | Ithaca Energy vs. Young Cos Brewery | Ithaca Energy vs. Cornish Metals |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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