Correlation Between European Metals and NOV
Can any of the company-specific risk be diversified away by investing in both European Metals and NOV 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 NOV 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 NOV Inc, you can compare the effects of market volatilities on European Metals and NOV 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 NOV. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and NOV.
Diversification Opportunities for European Metals and NOV
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and NOV is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and NOV Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOV 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 NOV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOV Inc has no effect on the direction of European Metals i.e., European Metals and NOV go up and down completely randomly.
Pair Corralation between European Metals and NOV
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the NOV. In addition to that, European Metals is 77.05 times more volatile than NOV Inc. It trades about -0.07 of its total potential returns per unit of risk. NOV Inc is currently generating about 0.13 per unit of volatility. If you would invest 1,553 in NOV Inc on September 14, 2024 and sell it today you would earn a total of 47.00 from holding NOV Inc or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Metals Holdings vs. NOV Inc
Performance |
| Timeline |
| European Metals Holdings |
| NOV Inc |
European Metals and NOV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and NOV
The main advantage of trading using opposite European Metals and NOV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, NOV 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 NOV will offset losses from the drop in NOV's long position.| European Metals vs. Made Tech Group | European Metals vs. Ecclesiastical Insurance Office | European Metals vs. Concurrent Technologies Plc | European Metals vs. Roper Technologies |
| NOV vs. MediaZest plc | NOV vs. McEwen Mining | NOV vs. Universal Music Group | NOV vs. European Metals Holdings |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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