Correlation Between Euro Manganese and Grid Metals
Can any of the company-specific risk be diversified away by investing in both Euro Manganese and Grid 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 Euro Manganese and Grid Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Euro Manganese and Grid Metals Corp, you can compare the effects of market volatilities on Euro Manganese and Grid 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 Euro Manganese with a short position of Grid Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euro Manganese and Grid Metals.
Diversification Opportunities for Euro Manganese and Grid Metals
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Euro and Grid is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Euro Manganese and Grid Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grid Metals Corp 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 Grid Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grid Metals Corp has no effect on the direction of Euro Manganese i.e., Euro Manganese and Grid Metals go up and down completely randomly.
Pair Corralation between Euro Manganese and Grid Metals
Assuming the 90 days horizon Euro Manganese is expected to generate 0.91 times more return on investment than Grid Metals. However, Euro Manganese is 1.1 times less risky than Grid Metals. It trades about -0.1 of its potential returns per unit of risk. Grid Metals Corp is currently generating about -0.11 per unit of risk. If you would invest 4.20 in Euro Manganese on August 28, 2024 and sell it today you would lose (0.80) from holding Euro Manganese or give up 19.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Euro Manganese vs. Grid Metals Corp
Performance |
| Timeline |
| Euro Manganese |
| Grid Metals Corp |
Euro Manganese and Grid Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Euro Manganese and Grid Metals
The main advantage of trading using opposite Euro Manganese and Grid Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euro Manganese position performs unexpectedly, Grid 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 Grid Metals will offset losses from the drop in Grid Metals' long position.The idea behind Euro Manganese and Grid Metals Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Grid Metals vs. Ascendant Resources | Grid Metals vs. Cantex Mine Development | Grid Metals vs. Amarc Resources | Grid Metals vs. Sterling 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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