Correlation Between Empire Metals and Auto Trader
Can any of the company-specific risk be diversified away by investing in both Empire Metals and Auto Trader 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 Auto Trader 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 Auto Trader Group, you can compare the effects of market volatilities on Empire Metals and Auto Trader 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 Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Metals and Auto Trader.
Diversification Opportunities for Empire Metals and Auto Trader
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Empire and Auto is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group 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 Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of Empire Metals i.e., Empire Metals and Auto Trader go up and down completely randomly.
Pair Corralation between Empire Metals and Auto Trader
Assuming the 90 days trading horizon Empire Metals Limited is expected to under-perform the Auto Trader. In addition to that, Empire Metals is 1.19 times more volatile than Auto Trader Group. It trades about -0.26 of its total potential returns per unit of risk. Auto Trader Group is currently generating about -0.01 per unit of volatility. If you would invest 84,420 in Auto Trader Group on September 2, 2024 and sell it today you would lose (520.00) from holding Auto Trader Group or give up 0.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire Metals Limited vs. Auto Trader Group
Performance |
| Timeline |
| Empire Metals Limited |
| Auto Trader Group |
Empire Metals and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Metals and Auto Trader
The main advantage of trading using opposite Empire Metals and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Metals position performs unexpectedly, Auto Trader 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 Auto Trader will offset losses from the drop in Auto Trader's long position.| Empire Metals vs. Givaudan SA | Empire Metals vs. Antofagasta PLC | Empire Metals vs. Centamin PLC | Empire Metals vs. Atalaya Mining |
| Auto Trader vs. Catalyst Media Group | Auto Trader vs. Tamburi Investment Partners | Auto Trader vs. Magnora ASA | Auto Trader vs. RTW Venture Fund |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |