Correlation Between Europa Metals and Givaudan
Can any of the company-specific risk be diversified away by investing in both Europa Metals and Givaudan 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 Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europa Metals and Givaudan SA, you can compare the effects of market volatilities on Europa Metals and Givaudan 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 Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europa Metals and Givaudan.
Diversification Opportunities for Europa Metals and Givaudan
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Europa and Givaudan is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Europa Metals and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA 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 Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of Europa Metals i.e., Europa Metals and Givaudan go up and down completely randomly.
Pair Corralation between Europa Metals and Givaudan
Assuming the 90 days trading horizon Europa Metals is expected to generate 3.84 times more return on investment than Givaudan. However, Europa Metals is 3.84 times more volatile than Givaudan SA. It trades about 0.05 of its potential returns per unit of risk. Givaudan SA is currently generating about 0.03 per unit of risk. If you would invest 160.00 in Europa Metals on August 27, 2024 and sell it today you would earn a total of 40.00 from holding Europa Metals or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Europa Metals vs. Givaudan SA
Performance |
| Timeline |
| Europa Metals |
| Givaudan SA |
Europa Metals and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europa Metals and Givaudan
The main advantage of trading using opposite Europa Metals and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europa Metals position performs unexpectedly, Givaudan 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 Givaudan will offset losses from the drop in Givaudan's long position.| Europa Metals vs. Givaudan SA | Europa Metals vs. Antofagasta PLC | Europa Metals vs. Centamin PLC | Europa Metals vs. Atalaya Mining |
| Givaudan vs. Batm Advanced Communications | Givaudan vs. Cembra Money Bank | Givaudan vs. National Bank of | Givaudan vs. OneSavings Bank PLC |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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