Correlation Between European Metals and Bell Food
Can any of the company-specific risk be diversified away by investing in both European Metals and Bell Food 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 Bell Food 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 Bell Food Group, you can compare the effects of market volatilities on European Metals and Bell Food 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 Bell Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Bell Food.
Diversification Opportunities for European Metals and Bell Food
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between European and Bell is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Bell Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bell Food Group 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 Bell Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bell Food Group has no effect on the direction of European Metals i.e., European Metals and Bell Food go up and down completely randomly.
Pair Corralation between European Metals and Bell Food
Assuming the 90 days trading horizon European Metals Holdings is expected to generate 2.34 times more return on investment than Bell Food. However, European Metals is 2.34 times more volatile than Bell Food Group. It trades about 0.1 of its potential returns per unit of risk. Bell Food Group is currently generating about -0.11 per unit of risk. If you would invest 725.00 in European Metals Holdings on November 7, 2024 and sell it today you would earn a total of 50.00 from holding European Metals Holdings or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
European Metals Holdings vs. Bell Food Group
Performance |
| Timeline |
| European Metals Holdings |
| Bell Food Group |
European Metals and Bell Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Bell Food
The main advantage of trading using opposite European Metals and Bell Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Bell Food 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 Bell Food will offset losses from the drop in Bell Food's long position.| European Metals vs. Dairy Farm International | European Metals vs. Associated British Foods | European Metals vs. Alien Metals | European Metals vs. Travel Leisure Co |
| Bell Food vs. TechnipFMC PLC | Bell Food vs. Zoom Video Communications | Bell Food vs. Arcticzymes Technologies ASA | Bell Food vs. Orient Telecoms |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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