Correlation Between European Metals and Mercantile Investment
Can any of the company-specific risk be diversified away by investing in both European Metals and Mercantile Investment 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 Mercantile Investment 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 The Mercantile Investment, you can compare the effects of market volatilities on European Metals and Mercantile Investment 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 Mercantile Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Mercantile Investment.
Diversification Opportunities for European Metals and Mercantile Investment
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between European and Mercantile is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and The Mercantile Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Mercantile Investment 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 Mercantile Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Mercantile Investment has no effect on the direction of European Metals i.e., European Metals and Mercantile Investment go up and down completely randomly.
Pair Corralation between European Metals and Mercantile Investment
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Mercantile Investment. In addition to that, European Metals is 2.09 times more volatile than The Mercantile Investment. It trades about -0.11 of its total potential returns per unit of risk. The Mercantile Investment is currently generating about 0.05 per unit of volatility. If you would invest 23,500 in The Mercantile Investment on September 4, 2024 and sell it today you would earn a total of 200.00 from holding The Mercantile Investment or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Metals Holdings vs. The Mercantile Investment
Performance |
| Timeline |
| European Metals Holdings |
| The Mercantile Investment |
European Metals and Mercantile Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Mercantile Investment
The main advantage of trading using opposite European Metals and Mercantile Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Mercantile Investment 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 Mercantile Investment will offset losses from the drop in Mercantile Investment's long position.| European Metals vs. Antofagasta PLC | European Metals vs. Atalaya Mining | European Metals vs. Ferrexpo PLC | European Metals vs. Amaroq Minerals |
| Mercantile Investment vs. Sovereign Metals | Mercantile Investment vs. Iron Mountain | Mercantile Investment vs. European Metals Holdings | Mercantile Investment vs. Veolia Environnement VE |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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