Correlation Between Empire Metals and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both Empire Metals and FuelCell 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 Empire Metals and FuelCell Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire Metals Limited and FuelCell Energy, you can compare the effects of market volatilities on Empire Metals and FuelCell 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 Empire Metals with a short position of FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Metals and FuelCell Energy.
Diversification Opportunities for Empire Metals and FuelCell Energy
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Empire and FuelCell is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy and Empire 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 Empire Metals Limited are associated (or correlated) with FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of Empire Metals i.e., Empire Metals and FuelCell Energy go up and down completely randomly.
Pair Corralation between Empire Metals and FuelCell Energy
Assuming the 90 days trading horizon Empire Metals Limited is expected to generate 0.98 times more return on investment than FuelCell Energy. However, Empire Metals Limited is 1.02 times less risky than FuelCell Energy. It trades about 0.47 of its potential returns per unit of risk. FuelCell Energy is currently generating about -0.69 per unit of risk. If you would invest 715.00 in Empire Metals Limited on November 6, 2024 and sell it today you would earn a total of 285.00 from holding Empire Metals Limited or generate 39.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire Metals Limited vs. FuelCell Energy
Performance |
| Timeline |
| Empire Metals Limited |
| FuelCell Energy |
Empire Metals and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Metals and FuelCell Energy
The main advantage of trading using opposite Empire Metals and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Metals position performs unexpectedly, FuelCell 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.| Empire Metals vs. Arrow Electronics | Empire Metals vs. New Residential Investment | Empire Metals vs. Datagroup SE | Empire Metals vs. Lowland Investment Co |
| FuelCell Energy vs. Ebro Foods | FuelCell Energy vs. Intermediate Capital Group | FuelCell Energy vs. MediaZest plc | FuelCell Energy vs. XLMedia 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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