Correlation Between European Metals and Macy
Can any of the company-specific risk be diversified away by investing in both European Metals and Macy 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 Macy 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 Macy Inc, you can compare the effects of market volatilities on European Metals and Macy 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 Macy. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Macy.
Diversification Opportunities for European Metals and Macy
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and Macy is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Macy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macy Inc 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 Macy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macy Inc has no effect on the direction of European Metals i.e., European Metals and Macy go up and down completely randomly.
Pair Corralation between European Metals and Macy
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Macy. In addition to that, European Metals is 1.13 times more volatile than Macy Inc. It trades about -0.08 of its total potential returns per unit of risk. Macy Inc is currently generating about -0.02 per unit of volatility. If you would invest 1,523 in Macy Inc on October 24, 2024 and sell it today you would lose (82.00) from holding Macy Inc or give up 5.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.39% |
| Values | Daily Returns |
European Metals Holdings vs. Macy Inc
Performance |
| Timeline |
| European Metals Holdings |
| Macy Inc |
European Metals and Macy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Macy
The main advantage of trading using opposite European Metals and Macy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Macy 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 Macy will offset losses from the drop in Macy'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 |
| Macy vs. Adriatic Metals | Macy vs. Capital Metals PLC | Macy vs. European Metals Holdings | Macy vs. Power Metal Resources |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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