Correlation Between Eagle Mountain and Medical Developments
Can any of the company-specific risk be diversified away by investing in both Eagle Mountain and Medical Developments 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 Medical Developments 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 Medical Developments International, you can compare the effects of market volatilities on Eagle Mountain and Medical Developments 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 Medical Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Mountain and Medical Developments.
Diversification Opportunities for Eagle Mountain and Medical Developments
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eagle and Medical is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Mountain Mining and Medical Developments Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Developments 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 Medical Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Developments has no effect on the direction of Eagle Mountain i.e., Eagle Mountain and Medical Developments go up and down completely randomly.
Pair Corralation between Eagle Mountain and Medical Developments
Assuming the 90 days trading horizon Eagle Mountain Mining is expected to generate 1.25 times more return on investment than Medical Developments. However, Eagle Mountain is 1.25 times more volatile than Medical Developments International. It trades about -0.03 of its potential returns per unit of risk. Medical Developments International is currently generating about -0.04 per unit of risk. If you would invest 8.00 in Eagle Mountain Mining on August 25, 2024 and sell it today you would lose (4.10) from holding Eagle Mountain Mining or give up 51.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Mountain Mining vs. Medical Developments Internati
Performance |
| Timeline |
| Eagle Mountain Mining |
| Medical Developments |
Eagle Mountain and Medical Developments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Mountain and Medical Developments
The main advantage of trading using opposite Eagle Mountain and Medical Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Mountain position performs unexpectedly, Medical Developments 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 Medical Developments will offset losses from the drop in Medical Developments' long position.| Eagle Mountain vs. Northern Star Resources | Eagle Mountain vs. Evolution Mining | Eagle Mountain vs. Aneka Tambang Tbk | Eagle Mountain vs. De Grey Mining |
| Medical Developments vs. Autosports Group | Medical Developments vs. Cleanaway Waste Management | Medical Developments vs. Step One Clothing | Medical Developments vs. Black Rock Mining |
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 Stocks Directory module to find actively traded stocks across global markets.
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