Correlation Between Europa Metals and British Amer
Can any of the company-specific risk be diversified away by investing in both Europa Metals and British Amer 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 Europa Metals and British Amer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europa Metals and British American Tobacco, you can compare the effects of market volatilities on Europa Metals and British Amer 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 Europa Metals with a short position of British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europa Metals and British Amer.
Diversification Opportunities for Europa Metals and British Amer
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Europa and British is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Europa Metals and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and Europa 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 Europa Metals are associated (or correlated) with British Amer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Europa Metals i.e., Europa Metals and British Amer go up and down completely randomly.
Pair Corralation between Europa Metals and British Amer
Assuming the 90 days trading horizon Europa Metals is expected to generate 7.88 times more return on investment than British Amer. However, Europa Metals is 7.88 times more volatile than British American Tobacco. It trades about 0.04 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.1 per unit of risk. If you would invest 4,800 in Europa Metals on September 3, 2024 and sell it today you would lose (300.00) from holding Europa Metals or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europa Metals vs. British American Tobacco
Performance |
| Timeline |
| Europa Metals |
| British American Tobacco |
Europa Metals and British Amer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europa Metals and British Amer
The main advantage of trading using opposite Europa Metals and British Amer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europa Metals position performs unexpectedly, British Amer 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 British Amer will offset losses from the drop in British Amer's long position.| Europa Metals vs. Glencore PLC | Europa Metals vs. Anglo American PLC | Europa Metals vs. African Rainbow Minerals | Europa Metals vs. Jubilee Platinum |
| British Amer vs. Sasol Ltd Bee | British Amer vs. Centaur Bci Balanced | British Amer vs. Growthpoint Properties | British Amer vs. Coronation Global Equity |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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