Correlation Between EROAD and Sky Metals
Can any of the company-specific risk be diversified away by investing in both EROAD and Sky Metals 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 EROAD and Sky Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EROAD and Sky Metals, you can compare the effects of market volatilities on EROAD and Sky Metals 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 EROAD with a short position of Sky Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of EROAD and Sky Metals.
Diversification Opportunities for EROAD and Sky Metals
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EROAD and Sky is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding EROAD and Sky Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sky Metals and EROAD 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 EROAD are associated (or correlated) with Sky Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sky Metals has no effect on the direction of EROAD i.e., EROAD and Sky Metals go up and down completely randomly.
Pair Corralation between EROAD and Sky Metals
Assuming the 90 days trading horizon EROAD is expected to generate 45.68 times less return on investment than Sky Metals. But when comparing it to its historical volatility, EROAD is 1.25 times less risky than Sky Metals. It trades about 0.0 of its potential returns per unit of risk. Sky Metals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3.90 in Sky Metals on September 1, 2024 and sell it today you would earn a total of 1.20 from holding Sky Metals or generate 30.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EROAD vs. Sky Metals
Performance |
| Timeline |
| EROAD |
| Sky Metals |
EROAD and Sky Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EROAD and Sky Metals
The main advantage of trading using opposite EROAD and Sky Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EROAD position performs unexpectedly, Sky Metals 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 Sky Metals will offset losses from the drop in Sky Metals' long position.| EROAD vs. Centuria Industrial Reit | EROAD vs. Sky Metals | EROAD vs. The Environmental Group | EROAD vs. Qbe Insurance Group |
| Sky Metals vs. Carnegie Clean Energy | Sky Metals vs. Nufarm Finance NZ | Sky Metals vs. Richmond Vanadium Technology | Sky Metals vs. Macquarie Technology 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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