Correlation Between European Metals and Athelney Trust
Can any of the company-specific risk be diversified away by investing in both European Metals and Athelney Trust 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 Athelney Trust 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 Athelney Trust plc, you can compare the effects of market volatilities on European Metals and Athelney Trust 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 Athelney Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Athelney Trust.
Diversification Opportunities for European Metals and Athelney Trust
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between European and Athelney is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Athelney Trust plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athelney Trust plc 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 Athelney Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athelney Trust plc has no effect on the direction of European Metals i.e., European Metals and Athelney Trust go up and down completely randomly.
Pair Corralation between European Metals and Athelney Trust
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Athelney Trust. In addition to that, European Metals is 5.3 times more volatile than Athelney Trust plc. It trades about -0.04 of its total potential returns per unit of risk. Athelney Trust plc is currently generating about 0.03 per unit of volatility. If you would invest 17,513 in Athelney Trust plc on November 3, 2024 and sell it today you would earn a total of 987.00 from holding Athelney Trust plc or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Metals Holdings vs. Athelney Trust plc
Performance |
| Timeline |
| European Metals Holdings |
| Athelney Trust plc |
European Metals and Athelney Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Athelney Trust
The main advantage of trading using opposite European Metals and Athelney Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Athelney Trust 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 Athelney Trust will offset losses from the drop in Athelney Trust's long position.| European Metals vs. Empire Metals Limited | European Metals vs. Air Products Chemicals | European Metals vs. Virgin Wines UK | European Metals vs. Evolution Gaming Group |
| Athelney Trust vs. Applied Materials | Athelney Trust vs. Bloomsbury Publishing Plc | Athelney Trust vs. SBM Offshore NV | Athelney Trust 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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