Correlation Between European Metals and Panasonic Corp
Can any of the company-specific risk be diversified away by investing in both European Metals and Panasonic Corp 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 Panasonic Corp 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 Panasonic Corp, you can compare the effects of market volatilities on European Metals and Panasonic Corp 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 Panasonic Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Panasonic Corp.
Diversification Opportunities for European Metals and Panasonic Corp
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and Panasonic is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Panasonic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panasonic 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 Panasonic Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panasonic Corp has no effect on the direction of European Metals i.e., European Metals and Panasonic Corp go up and down completely randomly.
Pair Corralation between European Metals and Panasonic Corp
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Panasonic Corp. But the stock apears to be less risky and, when comparing its historical volatility, European Metals Holdings is 1.28 times less risky than Panasonic Corp. The stock trades about -0.22 of its potential returns per unit of risk. The Panasonic Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 142,450 in Panasonic Corp on September 12, 2024 and sell it today you would earn a total of 8,250 from holding Panasonic Corp or generate 5.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 50.0% |
| Values | Daily Returns |
European Metals Holdings vs. Panasonic Corp
Performance |
| Timeline |
| European Metals Holdings |
| Panasonic Corp |
European Metals and Panasonic Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Panasonic Corp
The main advantage of trading using opposite European Metals and Panasonic Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Panasonic Corp 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 Panasonic Corp will offset losses from the drop in Panasonic Corp'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 |
| Panasonic Corp vs. Naturhouse Health SA | Panasonic Corp vs. Universal Health Services | Panasonic Corp vs. International Consolidated Airlines | Panasonic Corp vs. HCA Healthcare |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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