Correlation Between Empire Metals and Technicolor
Can any of the company-specific risk be diversified away by investing in both Empire Metals and Technicolor 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 Technicolor 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 Technicolor, you can compare the effects of market volatilities on Empire Metals and Technicolor 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 Technicolor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Metals and Technicolor.
Diversification Opportunities for Empire Metals and Technicolor
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Empire and Technicolor is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited and Technicolor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technicolor 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 Technicolor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technicolor has no effect on the direction of Empire Metals i.e., Empire Metals and Technicolor go up and down completely randomly.
Pair Corralation between Empire Metals and Technicolor
Assuming the 90 days trading horizon Empire Metals Limited is expected to generate 0.9 times more return on investment than Technicolor. However, Empire Metals Limited is 1.12 times less risky than Technicolor. It trades about 0.09 of its potential returns per unit of risk. Technicolor is currently generating about 0.01 per unit of risk. If you would invest 690.00 in Empire Metals Limited on October 9, 2024 and sell it today you would earn a total of 25.00 from holding Empire Metals Limited or generate 3.62% 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. Technicolor
Performance |
| Timeline |
| Empire Metals Limited |
| Technicolor |
Empire Metals and Technicolor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Metals and Technicolor
The main advantage of trading using opposite Empire Metals and Technicolor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Metals position performs unexpectedly, Technicolor 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 Technicolor will offset losses from the drop in Technicolor's long position.| Empire Metals vs. Iron Mountain | Empire Metals vs. Tata Steel Limited | Empire Metals vs. Symphony Environmental Technologies | Empire Metals vs. United Airlines Holdings |
| Technicolor vs. Walmart | Technicolor vs. BYD Co | Technicolor vs. Volkswagen AG | Technicolor vs. Volkswagen AG Non Vtg |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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