Correlation Between European Metals and Nationwide Building
Can any of the company-specific risk be diversified away by investing in both European Metals and Nationwide Building 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 Nationwide Building 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 Nationwide Building Society, you can compare the effects of market volatilities on European Metals and Nationwide Building 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 Nationwide Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Nationwide Building.
Diversification Opportunities for European Metals and Nationwide Building
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between European and Nationwide is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Nationwide Building Society in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Building 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 Nationwide Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Building has no effect on the direction of European Metals i.e., European Metals and Nationwide Building go up and down completely randomly.
Pair Corralation between European Metals and Nationwide Building
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Nationwide Building. In addition to that, European Metals is 4.71 times more volatile than Nationwide Building Society. It trades about -0.07 of its total potential returns per unit of risk. Nationwide Building Society is currently generating about 0.02 per unit of volatility. If you would invest 12,400 in Nationwide Building Society on September 23, 2024 and sell it today you would earn a total of 750.00 from holding Nationwide Building Society or generate 6.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Metals Holdings vs. Nationwide Building Society
Performance |
| Timeline |
| European Metals Holdings |
| Nationwide Building |
European Metals and Nationwide Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Nationwide Building
The main advantage of trading using opposite European Metals and Nationwide Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Nationwide Building 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 Nationwide Building will offset losses from the drop in Nationwide Building's long position.| European Metals vs. Fresenius Medical Care | European Metals vs. Oakley Capital Investments | European Metals vs. New Residential Investment | European Metals vs. Compal Electronics GDR |
| Nationwide Building vs. Quadrise Plc | Nationwide Building vs. ImmuPharma PLC | Nationwide Building vs. Intuitive Investments Group | Nationwide Building vs. European Metals Holdings |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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