Correlation Between European Metals and State Street
Can any of the company-specific risk be diversified away by investing in both European Metals and State Street 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 State Street 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 State Street Corp, you can compare the effects of market volatilities on European Metals and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and State Street.
Diversification Opportunities for European Metals and State Street
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between European and State is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and State Street Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Corp 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Corp has no effect on the direction of European Metals i.e., European Metals and State Street go up and down completely randomly.
Pair Corralation between European Metals and State Street
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the State Street. In addition to that, European Metals is 2.76 times more volatile than State Street Corp. It trades about -0.11 of its total potential returns per unit of risk. State Street Corp is currently generating about 0.09 per unit of volatility. If you would invest 6,665 in State Street Corp on September 12, 2024 and sell it today you would earn a total of 3,245 from holding State Street Corp or generate 48.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.59% |
| Values | Daily Returns |
European Metals Holdings vs. State Street Corp
Performance |
| Timeline |
| European Metals Holdings |
| State Street Corp |
European Metals and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and State Street
The main advantage of trading using opposite European Metals and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| European Metals vs. National Bank of | European Metals vs. Alior Bank SA | European Metals vs. Solstad Offshore ASA | European Metals vs. St Galler Kantonalbank |
| State Street vs. Symphony Environmental Technologies | State Street vs. Caledonia Mining | State Street vs. TechnipFMC PLC | State Street vs. Monster Beverage Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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