Correlation Between Eagle Mountain and Centaurus Metals
Can any of the company-specific risk be diversified away by investing in both Eagle Mountain and Centaurus 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 Mountain and Centaurus Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Mountain Mining and Centaurus Metals, you can compare the effects of market volatilities on Eagle Mountain and Centaurus 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 Mountain with a short position of Centaurus Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Mountain and Centaurus Metals.
Diversification Opportunities for Eagle Mountain and Centaurus Metals
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eagle and Centaurus is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Mountain Mining and Centaurus Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals and Eagle Mountain 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 Mountain Mining are associated (or correlated) with Centaurus Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaurus Metals has no effect on the direction of Eagle Mountain i.e., Eagle Mountain and Centaurus Metals go up and down completely randomly.
Pair Corralation between Eagle Mountain and Centaurus Metals
Assuming the 90 days trading horizon Eagle Mountain Mining is expected to under-perform the Centaurus Metals. In addition to that, Eagle Mountain is 2.85 times more volatile than Centaurus Metals. It trades about -0.32 of its total potential returns per unit of risk. Centaurus Metals is currently generating about -0.08 per unit of volatility. If you would invest 49.00 in Centaurus Metals on August 28, 2024 and sell it today you would lose (4.00) from holding Centaurus Metals or give up 8.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Mountain Mining vs. Centaurus Metals
Performance |
| Timeline |
| Eagle Mountain Mining |
| Centaurus Metals |
Eagle Mountain and Centaurus Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Mountain and Centaurus Metals
The main advantage of trading using opposite Eagle Mountain and Centaurus Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Mountain position performs unexpectedly, Centaurus 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 Centaurus Metals will offset losses from the drop in Centaurus Metals' long position.| Eagle Mountain vs. Northern Star Resources | Eagle Mountain vs. Evolution Mining | Eagle Mountain vs. Bluescope Steel | Eagle Mountain vs. Sandfire Resources NL |
| Centaurus Metals vs. Northern Star Resources | Centaurus Metals vs. Evolution Mining | Centaurus Metals vs. Bluescope Steel | Centaurus Metals vs. Sandfire Resources NL |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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