Correlation Between European Metals and EJF Investments
Can any of the company-specific risk be diversified away by investing in both European Metals and EJF Investments 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 EJF Investments 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 EJF Investments, you can compare the effects of market volatilities on European Metals and EJF Investments 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 EJF Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and EJF Investments.
Diversification Opportunities for European Metals and EJF Investments
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and EJF is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and EJF Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EJF Investments 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 EJF Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EJF Investments has no effect on the direction of European Metals i.e., European Metals and EJF Investments go up and down completely randomly.
Pair Corralation between European Metals and EJF Investments
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the EJF Investments. In addition to that, European Metals is 2.23 times more volatile than EJF Investments. It trades about -0.1 of its total potential returns per unit of risk. EJF Investments is currently generating about 0.12 per unit of volatility. If you would invest 9,816 in EJF Investments on October 17, 2024 and sell it today you would earn a total of 2,834 from holding EJF Investments or generate 28.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Metals Holdings vs. EJF Investments
Performance |
| Timeline |
| European Metals Holdings |
| EJF Investments |
European Metals and EJF Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and EJF Investments
The main advantage of trading using opposite European Metals and EJF Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, EJF Investments 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 EJF Investments will offset losses from the drop in EJF Investments' long position.| European Metals vs. EJF Investments | European Metals vs. Kinnevik Investment AB | European Metals vs. Mobius Investment Trust | European Metals vs. Take Two Interactive Software |
| EJF Investments vs. SupplyMe Capital PLC | EJF Investments vs. SM Energy Co | EJF Investments vs. FuelCell Energy | EJF Investments vs. Grand Vision 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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