Correlation Between Euro Manganese and Global Energy
Can any of the company-specific risk be diversified away by investing in both Euro Manganese and Global 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 Global 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 Global Energy Metals, you can compare the effects of market volatilities on Euro Manganese and Global 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 Global Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euro Manganese and Global Energy.
Diversification Opportunities for Euro Manganese and Global Energy
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Euro and Global is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Euro Manganese and Global Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global 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 Global Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Energy Metals has no effect on the direction of Euro Manganese i.e., Euro Manganese and Global Energy go up and down completely randomly.
Pair Corralation between Euro Manganese and Global Energy
Assuming the 90 days horizon Euro Manganese is expected to under-perform the Global Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, Euro Manganese is 1.11 times less risky than Global Energy. The otc stock trades about -0.02 of its potential returns per unit of risk. The Global Energy Metals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5.29 in Global Energy Metals on September 3, 2024 and sell it today you would lose (4.06) from holding Global Energy Metals or give up 76.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Euro Manganese vs. Global Energy Metals
Performance |
| Timeline |
| Euro Manganese |
| Global Energy Metals |
Euro Manganese and Global Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Euro Manganese and Global Energy
The main advantage of trading using opposite Euro Manganese and Global Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euro Manganese position performs unexpectedly, Global 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 Global Energy will offset losses from the drop in Global Energy's long position.| Euro Manganese vs. Bravada Gold | Euro Manganese vs. Silver Spruce Resources | Euro Manganese vs. Monitor Ventures | Euro Manganese vs. Pershing Resources |
| Global Energy vs. Golden Goliath Resources | Global Energy vs. Fireweed Zinc | Global Energy vs. Monitor Ventures | Global Energy vs. Lithium Australia NL |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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