Correlation Between Euro Manganese and Forum Energy
Can any of the company-specific risk be diversified away by investing in both Euro Manganese and Forum Energy 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 Euro Manganese and Forum Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Euro Manganese and Forum Energy Metals, you can compare the effects of market volatilities on Euro Manganese and Forum Energy 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 Euro Manganese with a short position of Forum Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euro Manganese and Forum Energy.
Diversification Opportunities for Euro Manganese and Forum Energy
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Euro and Forum is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Euro Manganese and Forum Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Energy Metals and Euro Manganese 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 Euro Manganese are associated (or correlated) with Forum Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Energy Metals has no effect on the direction of Euro Manganese i.e., Euro Manganese and Forum Energy go up and down completely randomly.
Pair Corralation between Euro Manganese and Forum Energy
Assuming the 90 days horizon Euro Manganese is expected to generate 2.59 times more return on investment than Forum Energy. However, Euro Manganese is 2.59 times more volatile than Forum Energy Metals. It trades about 0.12 of its potential returns per unit of risk. Forum Energy Metals is currently generating about -0.22 per unit of risk. If you would invest 2.80 in Euro Manganese on November 25, 2024 and sell it today you would earn a total of 0.50 from holding Euro Manganese or generate 17.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Euro Manganese vs. Forum Energy Metals
Performance |
Timeline |
Euro Manganese |
Forum Energy Metals |
Euro Manganese and Forum Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Euro Manganese and Forum Energy
The main advantage of trading using opposite Euro Manganese and Forum Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euro Manganese position performs unexpectedly, Forum Energy 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 Forum Energy will offset losses from the drop in Forum Energy's long position.Euro Manganese vs. Bravada Gold | ||
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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