Correlation Between European Metals and Extra Space
Can any of the company-specific risk be diversified away by investing in both European Metals and Extra Space 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 European Metals and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Metals Holdings and Extra Space Storage, you can compare the effects of market volatilities on European Metals and Extra Space 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 European Metals with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Extra Space.
Diversification Opportunities for European Metals and Extra Space
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between European and Extra is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Extra Space Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extra Space Storage and European 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 European Metals Holdings are associated (or correlated) with Extra Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extra Space Storage has no effect on the direction of European Metals i.e., European Metals and Extra Space go up and down completely randomly.
Pair Corralation between European Metals and Extra Space
Assuming the 90 days trading horizon European Metals Holdings is expected to generate 4.66 times more return on investment than Extra Space. However, European Metals is 4.66 times more volatile than Extra Space Storage. It trades about 0.07 of its potential returns per unit of risk. Extra Space Storage is currently generating about 0.19 per unit of risk. If you would invest 725.00 in European Metals Holdings on October 24, 2024 and sell it today you would earn a total of 25.00 from holding European Metals Holdings or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
European Metals Holdings vs. Extra Space Storage
Performance |
| Timeline |
| European Metals Holdings |
| Extra Space Storage |
European Metals and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Extra Space
The main advantage of trading using opposite European Metals and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Extra Space 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 Extra Space will offset losses from the drop in Extra Space's long position.| European Metals vs. JB Hunt Transport | European Metals vs. Vitec Software Group | European Metals vs. Universal Display Corp | European Metals vs. Made Tech Group |
| Extra Space vs. Ebro Foods | Extra Space vs. Livermore Investments Group | Extra Space vs. Edita Food Industries | Extra Space vs. Canadian General Investments |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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