Correlation Between European Metals and Mitchells Butlers
Can any of the company-specific risk be diversified away by investing in both European Metals and Mitchells Butlers 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 Mitchells Butlers 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 Mitchells Butlers PLC, you can compare the effects of market volatilities on European Metals and Mitchells Butlers 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 Mitchells Butlers. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Mitchells Butlers.
Diversification Opportunities for European Metals and Mitchells Butlers
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between European and Mitchells is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Mitchells Butlers PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitchells Butlers 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 Mitchells Butlers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitchells Butlers PLC has no effect on the direction of European Metals i.e., European Metals and Mitchells Butlers go up and down completely randomly.
Pair Corralation between European Metals and Mitchells Butlers
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Mitchells Butlers. In addition to that, European Metals is 1.51 times more volatile than Mitchells Butlers PLC. It trades about -0.22 of its total potential returns per unit of risk. Mitchells Butlers PLC is currently generating about 0.15 per unit of volatility. If you would invest 23,350 in Mitchells Butlers PLC on September 14, 2024 and sell it today you would earn a total of 950.00 from holding Mitchells Butlers PLC or generate 4.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Metals Holdings vs. Mitchells Butlers PLC
Performance |
| Timeline |
| European Metals Holdings |
| Mitchells Butlers PLC |
European Metals and Mitchells Butlers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Mitchells Butlers
The main advantage of trading using opposite European Metals and Mitchells Butlers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Mitchells Butlers 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 Mitchells Butlers will offset losses from the drop in Mitchells Butlers' long position.| European Metals vs. Made Tech Group | European Metals vs. Ecclesiastical Insurance Office | European Metals vs. Concurrent Technologies Plc | European Metals vs. Roper Technologies |
| Mitchells Butlers vs. European Metals Holdings | Mitchells Butlers vs. METALL ZUG AG | Mitchells Butlers vs. Melia Hotels | Mitchells Butlers vs. InterContinental Hotels Group |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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