Correlation Between ERAMET SA and Iluka Resources
Can any of the company-specific risk be diversified away by investing in both ERAMET SA and Iluka Resources 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 ERAMET SA and Iluka Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ERAMET SA and Iluka Resources Ltd, you can compare the effects of market volatilities on ERAMET SA and Iluka Resources 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 ERAMET SA with a short position of Iluka Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ERAMET SA and Iluka Resources.
Diversification Opportunities for ERAMET SA and Iluka Resources
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between ERAMET and Iluka is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding ERAMET SA and Iluka Resources Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iluka Resources and ERAMET SA 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 ERAMET SA are associated (or correlated) with Iluka Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iluka Resources has no effect on the direction of ERAMET SA i.e., ERAMET SA and Iluka Resources go up and down completely randomly.
Pair Corralation between ERAMET SA and Iluka Resources
Assuming the 90 days horizon ERAMET SA is expected to generate 1.23 times more return on investment than Iluka Resources. However, ERAMET SA is 1.23 times more volatile than Iluka Resources Ltd. It trades about -0.08 of its potential returns per unit of risk. Iluka Resources Ltd is currently generating about -0.33 per unit of risk. If you would invest 5,840 in ERAMET SA on August 30, 2024 and sell it today you would lose (388.00) from holding ERAMET SA or give up 6.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ERAMET SA vs. Iluka Resources Ltd
Performance |
| Timeline |
| ERAMET SA |
| Iluka Resources |
ERAMET SA and Iluka Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ERAMET SA and Iluka Resources
The main advantage of trading using opposite ERAMET SA and Iluka Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ERAMET SA position performs unexpectedly, Iluka Resources 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 Iluka Resources will offset losses from the drop in Iluka Resources' long position.| ERAMET SA vs. Iluka Resources Ltd | ERAMET SA vs. Giyani Metals Corp | ERAMET SA vs. IGO Limited | ERAMET SA vs. Grid Metals Corp |
| Iluka Resources vs. ERAMET SA | Iluka Resources vs. Giyani Metals Corp | Iluka Resources vs. IGO Limited | Iluka Resources vs. Grid Metals 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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