Correlation Between Eagle Plains and Adriatic Metals
Can any of the company-specific risk be diversified away by investing in both Eagle Plains and Adriatic Metals 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 Eagle Plains and Adriatic Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Plains Resources and Adriatic Metals PLC, you can compare the effects of market volatilities on Eagle Plains and Adriatic Metals 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 Eagle Plains with a short position of Adriatic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Plains and Adriatic Metals.
Diversification Opportunities for Eagle Plains and Adriatic Metals
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eagle and Adriatic is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Plains Resources and Adriatic Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adriatic Metals PLC and Eagle Plains 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 Eagle Plains Resources are associated (or correlated) with Adriatic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adriatic Metals PLC has no effect on the direction of Eagle Plains i.e., Eagle Plains and Adriatic Metals go up and down completely randomly.
Pair Corralation between Eagle Plains and Adriatic Metals
Assuming the 90 days horizon Eagle Plains Resources is expected to generate 4.08 times more return on investment than Adriatic Metals. However, Eagle Plains is 4.08 times more volatile than Adriatic Metals PLC. It trades about 0.04 of its potential returns per unit of risk. Adriatic Metals PLC is currently generating about 0.01 per unit of risk. If you would invest 7.00 in Eagle Plains Resources on August 29, 2024 and sell it today you would lose (0.20) from holding Eagle Plains Resources or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Plains Resources vs. Adriatic Metals PLC
Performance |
| Timeline |
| Eagle Plains Resources |
| Adriatic Metals PLC |
Eagle Plains and Adriatic Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Plains and Adriatic Metals
The main advantage of trading using opposite Eagle Plains and Adriatic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Plains position performs unexpectedly, Adriatic Metals 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 Adriatic Metals will offset losses from the drop in Adriatic Metals' long position.| Eagle Plains vs. Ascendant Resources | Eagle Plains vs. Cantex Mine Development | Eagle Plains vs. Amarc Resources | Eagle Plains vs. Sterling Metals Corp |
| Adriatic Metals vs. Huntsman Exploration | Adriatic Metals vs. Aurelia Metals Limited | Adriatic Metals vs. American Helium | Adriatic Metals vs. Progressive Planet Solutions |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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