Correlation Between European Residential and Hannan Metals
Can any of the company-specific risk be diversified away by investing in both European Residential and Hannan 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 European Residential and Hannan Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Residential Real and Hannan Metals, you can compare the effects of market volatilities on European Residential and Hannan 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 European Residential with a short position of Hannan Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Residential and Hannan Metals.
Diversification Opportunities for European Residential and Hannan Metals
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and Hannan is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding European Residential Real and Hannan Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannan Metals and European Residential 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 Residential Real are associated (or correlated) with Hannan Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannan Metals has no effect on the direction of European Residential i.e., European Residential and Hannan Metals go up and down completely randomly.
Pair Corralation between European Residential and Hannan Metals
Assuming the 90 days trading horizon European Residential is expected to generate 3.75 times less return on investment than Hannan Metals. But when comparing it to its historical volatility, European Residential Real is 3.16 times less risky than Hannan Metals. It trades about 0.04 of its potential returns per unit of risk. Hannan Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 33.00 in Hannan Metals on September 4, 2024 and sell it today you would earn a total of 28.00 from holding Hannan Metals or generate 84.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
European Residential Real vs. Hannan Metals
Performance |
| Timeline |
| European Residential Real |
| Hannan Metals |
European Residential and Hannan Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Residential and Hannan Metals
The main advantage of trading using opposite European Residential and Hannan Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Residential position performs unexpectedly, Hannan 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 Hannan Metals will offset losses from the drop in Hannan Metals' long position.| European Residential vs. BSR Real Estate | European Residential vs. Minto Apartment Real | European Residential vs. Nexus Real Estate | European Residential vs. Morguard North American |
| Hannan Metals vs. First Majestic Silver | Hannan Metals vs. Ivanhoe Energy | Hannan Metals vs. Orezone Gold Corp | Hannan Metals vs. Faraday Copper Corp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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