Correlation Between European Metals and Paccar
Can any of the company-specific risk be diversified away by investing in both European Metals and Paccar 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 Paccar 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 Paccar Inc, you can compare the effects of market volatilities on European Metals and Paccar 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 Paccar. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Paccar.
Diversification Opportunities for European Metals and Paccar
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and Paccar is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Paccar Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paccar 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 Paccar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paccar Inc has no effect on the direction of European Metals i.e., European Metals and Paccar go up and down completely randomly.
Pair Corralation between European Metals and Paccar
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Paccar. In addition to that, European Metals is 1.24 times more volatile than Paccar Inc. It trades about -0.22 of its total potential returns per unit of risk. Paccar Inc is currently generating about 0.0 per unit of volatility. If you would invest 11,648 in Paccar Inc on September 13, 2024 and sell it today you would lose (24.00) from holding Paccar Inc or give up 0.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
European Metals Holdings vs. Paccar Inc
Performance |
| Timeline |
| European Metals Holdings |
| Paccar Inc |
European Metals and Paccar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Paccar
The main advantage of trading using opposite European Metals and Paccar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Paccar 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 Paccar will offset losses from the drop in Paccar's long position.| European Metals vs. Givaudan SA | European Metals vs. Antofagasta PLC | European Metals vs. Ferrexpo PLC | European Metals vs. Atalaya Mining |
| Paccar vs. Various Eateries PLC | Paccar vs. Hilton Food Group | Paccar vs. XLMedia PLC | Paccar vs. Centaur Media |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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