Correlation Between European Metals and International Battery
Can any of the company-specific risk be diversified away by investing in both European Metals and International Battery 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 International Battery 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 International Battery Metals, you can compare the effects of market volatilities on European Metals and International Battery 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 International Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and International Battery.
Diversification Opportunities for European Metals and International Battery
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between European and International is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and International Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Battery 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 International Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Battery has no effect on the direction of European Metals i.e., European Metals and International Battery go up and down completely randomly.
Pair Corralation between European Metals and International Battery
Assuming the 90 days horizon European Metals Holdings is expected to generate 0.43 times more return on investment than International Battery. However, European Metals Holdings is 2.32 times less risky than International Battery. It trades about 0.05 of its potential returns per unit of risk. International Battery Metals is currently generating about 0.0 per unit of risk. If you would invest 49.00 in European Metals Holdings on November 2, 2024 and sell it today you would earn a total of 6.00 from holding European Metals Holdings or generate 12.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 22.47% |
| Values | Daily Returns |
European Metals Holdings vs. International Battery Metals
Performance |
| Timeline |
| European Metals Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| International Battery |
European Metals and International Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and International Battery
The main advantage of trading using opposite European Metals and International Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, International Battery 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 International Battery will offset losses from the drop in International Battery's long position.| European Metals vs. International Battery Metals | European Metals vs. Savannah Resources Plc | European Metals vs. Tartisan Nickel Corp | European Metals vs. Critical Elements |
| International Battery vs. Savannah Resources Plc | International Battery vs. Tartisan Nickel Corp | International Battery vs. Critical Elements | International Battery vs. Lithium Energi Exploration |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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