Correlation Between Empire Metals and EJF Investments
Can any of the company-specific risk be diversified away by investing in both Empire Metals and EJF Investments 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 EJF Investments 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 EJF Investments, you can compare the effects of market volatilities on Empire Metals and EJF Investments 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 EJF Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Metals and EJF Investments.
Diversification Opportunities for Empire Metals and EJF Investments
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Empire and EJF is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited and EJF Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EJF Investments 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 EJF Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EJF Investments has no effect on the direction of Empire Metals i.e., Empire Metals and EJF Investments go up and down completely randomly.
Pair Corralation between Empire Metals and EJF Investments
Assuming the 90 days trading horizon Empire Metals Limited is expected to generate 2.21 times more return on investment than EJF Investments. However, Empire Metals is 2.21 times more volatile than EJF Investments. It trades about 0.16 of its potential returns per unit of risk. EJF Investments is currently generating about 0.22 per unit of risk. If you would invest 680.00 in Empire Metals Limited on October 13, 2024 and sell it today you would earn a total of 55.00 from holding Empire Metals Limited or generate 8.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire Metals Limited vs. EJF Investments
Performance |
| Timeline |
| Empire Metals Limited |
| EJF Investments |
Empire Metals and EJF Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Metals and EJF Investments
The main advantage of trading using opposite Empire Metals and EJF Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Metals position performs unexpectedly, EJF Investments 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 EJF Investments will offset losses from the drop in EJF Investments' long position.| Empire Metals vs. Allianz Technology Trust | Empire Metals vs. Global Net Lease | Empire Metals vs. Auction Technology Group | Empire Metals vs. Impax Environmental Markets |
| EJF Investments vs. Universal Music Group | EJF Investments vs. Liontrust Asset Management | EJF Investments vs. FC Investment Trust | EJF Investments vs. Monks Investment Trust |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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