Correlation Between Eastfield Resources and Emergent Metals
Can any of the company-specific risk be diversified away by investing in both Eastfield Resources and Emergent 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 Eastfield Resources and Emergent Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastfield Resources and Emergent Metals Corp, you can compare the effects of market volatilities on Eastfield Resources and Emergent 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 Eastfield Resources with a short position of Emergent Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastfield Resources and Emergent Metals.
Diversification Opportunities for Eastfield Resources and Emergent Metals
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Eastfield and Emergent is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Eastfield Resources and Emergent Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Metals Corp and Eastfield Resources 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 Eastfield Resources are associated (or correlated) with Emergent Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emergent Metals Corp has no effect on the direction of Eastfield Resources i.e., Eastfield Resources and Emergent Metals go up and down completely randomly.
Pair Corralation between Eastfield Resources and Emergent Metals
Assuming the 90 days horizon Eastfield Resources is expected to generate 1.82 times less return on investment than Emergent Metals. But when comparing it to its historical volatility, Eastfield Resources is 1.1 times less risky than Emergent Metals. It trades about 0.04 of its potential returns per unit of risk. Emergent Metals Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Emergent Metals Corp on November 3, 2024 and sell it today you would earn a total of 1.00 from holding Emergent Metals Corp or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastfield Resources vs. Emergent Metals Corp
Performance |
| Timeline |
| Eastfield Resources |
| Emergent Metals Corp |
Eastfield Resources and Emergent Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastfield Resources and Emergent Metals
The main advantage of trading using opposite Eastfield Resources and Emergent Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastfield Resources position performs unexpectedly, Emergent 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 Emergent Metals will offset losses from the drop in Emergent Metals' long position.| Eastfield Resources vs. PyroGenesis Canada | Eastfield Resources vs. Solar Alliance Energy | Eastfield Resources vs. Braille Energy Systems | Eastfield Resources vs. BMO Aggregate Bond |
| Emergent Metals vs. PyroGenesis Canada | Emergent Metals vs. Solar Alliance Energy | Emergent Metals vs. Braille Energy Systems | Emergent Metals vs. BMO Aggregate Bond |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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