Correlation Between European Metals and Intermediate Capital
Can any of the company-specific risk be diversified away by investing in both European Metals and Intermediate Capital 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 Intermediate Capital 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 Intermediate Capital Group, you can compare the effects of market volatilities on European Metals and Intermediate Capital 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 Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Intermediate Capital.
Diversification Opportunities for European Metals and Intermediate Capital
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between European and Intermediate is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of European Metals i.e., European Metals and Intermediate Capital go up and down completely randomly.
Pair Corralation between European Metals and Intermediate Capital
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Intermediate Capital. In addition to that, European Metals is 1.96 times more volatile than Intermediate Capital Group. It trades about -0.07 of its total potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.06 per unit of volatility. If you would invest 127,311 in Intermediate Capital Group on October 22, 2024 and sell it today you would earn a total of 84,889 from holding Intermediate Capital Group or generate 66.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
European Metals Holdings vs. Intermediate Capital Group
Performance |
| Timeline |
| European Metals Holdings |
| Intermediate Capital |
European Metals and Intermediate Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Intermediate Capital
The main advantage of trading using opposite European Metals and Intermediate Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Intermediate Capital 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 Intermediate Capital will offset losses from the drop in Intermediate Capital's long position.| European Metals vs. SMA Solar Technology | European Metals vs. Geely Automobile Holdings | European Metals vs. Gamma Communications PLC | European Metals vs. Charter Communications Cl |
| Intermediate Capital vs. Edita Food Industries | Intermediate Capital vs. Omega Healthcare Investors | Intermediate Capital vs. Inspiration Healthcare Group | Intermediate Capital vs. Target Healthcare REIT |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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