Correlation Between Empire Metals and Golden Metal
Can any of the company-specific risk be diversified away by investing in both Empire Metals and Golden Metal 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 Golden Metal 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 Golden Metal Resources, you can compare the effects of market volatilities on Empire Metals and Golden Metal 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 Golden Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Metals and Golden Metal.
Diversification Opportunities for Empire Metals and Golden Metal
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Empire and Golden is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited and Golden Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Metal Resources 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 Golden Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Metal Resources has no effect on the direction of Empire Metals i.e., Empire Metals and Golden Metal go up and down completely randomly.
Pair Corralation between Empire Metals and Golden Metal
Assuming the 90 days trading horizon Empire Metals is expected to generate 5.59 times less return on investment than Golden Metal. But when comparing it to its historical volatility, Empire Metals Limited is 8.14 times less risky than Golden Metal. It trades about 0.08 of its potential returns per unit of risk. Golden Metal Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Golden Metal Resources on October 27, 2024 and sell it today you would earn a total of 3,491 from holding Golden Metal Resources or generate 38788.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 87.75% |
| Values | Daily Returns |
Empire Metals Limited vs. Golden Metal Resources
Performance |
| Timeline |
| Empire Metals Limited |
| Golden Metal Resources |
Empire Metals and Golden Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Metals and Golden Metal
The main advantage of trading using opposite Empire Metals and Golden Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Metals position performs unexpectedly, Golden Metal 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 Golden Metal will offset losses from the drop in Golden Metal's long position.| Empire Metals vs. Livermore Investments Group | Empire Metals vs. Seraphim Space Investment | Empire Metals vs. BlackRock Frontiers Investment | Empire Metals vs. Coeur Mining |
| Golden Metal vs. Sovereign Metals | Golden Metal vs. Tyson Foods Cl | Golden Metal vs. Capital Metals PLC | Golden Metal vs. Ebro Foods |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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