Correlation Between European Metals and Hansa Trust
Can any of the company-specific risk be diversified away by investing in both European Metals and Hansa 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 Hansa 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 Hansa Trust, you can compare the effects of market volatilities on European Metals and Hansa 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 Hansa Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Hansa Trust.
Diversification Opportunities for European Metals and Hansa Trust
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and Hansa is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Hansa Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansa Trust 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 Hansa Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansa Trust has no effect on the direction of European Metals i.e., European Metals and Hansa Trust go up and down completely randomly.
Pair Corralation between European Metals and Hansa Trust
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Hansa Trust. In addition to that, European Metals is 3.33 times more volatile than Hansa Trust. It trades about -0.1 of its total potential returns per unit of risk. Hansa Trust is currently generating about 0.05 per unit of volatility. If you would invest 19,804 in Hansa Trust on September 4, 2024 and sell it today you would earn a total of 2,796 from holding Hansa Trust or generate 14.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Metals Holdings vs. Hansa Trust
Performance |
| Timeline |
| European Metals Holdings |
| Hansa Trust |
European Metals and Hansa Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Hansa Trust
The main advantage of trading using opposite European Metals and Hansa Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Hansa 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 Hansa Trust will offset losses from the drop in Hansa Trust's long position.| European Metals vs. Antofagasta PLC | European Metals vs. Atalaya Mining | European Metals vs. Ferrexpo PLC | European Metals vs. Amaroq Minerals |
| Hansa Trust vs. Innovative Industrial Properties | Hansa Trust vs. Neometals | Hansa Trust vs. Ebro Foods | Hansa Trust vs. Hochschild Mining plc |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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