Correlation Between East Africa and Rumble
Can any of the company-specific risk be diversified away by investing in both East Africa and Rumble 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 East Africa and Rumble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Africa Metals and Rumble Inc, you can compare the effects of market volatilities on East Africa and Rumble 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 East Africa with a short position of Rumble. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Africa and Rumble.
Diversification Opportunities for East Africa and Rumble
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between East and Rumble is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding East Africa Metals and Rumble Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rumble Inc and East Africa 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 East Africa Metals are associated (or correlated) with Rumble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rumble Inc has no effect on the direction of East Africa i.e., East Africa and Rumble go up and down completely randomly.
Pair Corralation between East Africa and Rumble
Assuming the 90 days horizon East Africa Metals is expected to generate 13.88 times more return on investment than Rumble. However, East Africa is 13.88 times more volatile than Rumble Inc. It trades about 0.09 of its potential returns per unit of risk. Rumble Inc is currently generating about 0.02 per unit of risk. If you would invest 13.00 in East Africa Metals on August 24, 2024 and sell it today you would lose (2.00) from holding East Africa Metals or give up 15.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
East Africa Metals vs. Rumble Inc
Performance |
| Timeline |
| East Africa Metals |
| Rumble Inc |
East Africa and Rumble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Africa and Rumble
The main advantage of trading using opposite East Africa and Rumble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Africa position performs unexpectedly, Rumble 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 Rumble will offset losses from the drop in Rumble's long position.| East Africa vs. Ascendant Resources | East Africa vs. Cantex Mine Development | East Africa vs. Amarc Resources | East Africa vs. Sterling Metals Corp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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