Correlation Between Focus Graphite and Erin Ventures
Can any of the company-specific risk be diversified away by investing in both Focus Graphite and Erin Ventures 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 Focus Graphite and Erin Ventures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Graphite and Erin Ventures, you can compare the effects of market volatilities on Focus Graphite and Erin Ventures 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 Focus Graphite with a short position of Erin Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Graphite and Erin Ventures.
Diversification Opportunities for Focus Graphite and Erin Ventures
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Focus and Erin is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Erin Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erin Ventures and Focus Graphite 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 Focus Graphite are associated (or correlated) with Erin Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erin Ventures has no effect on the direction of Focus Graphite i.e., Focus Graphite and Erin Ventures go up and down completely randomly.
Pair Corralation between Focus Graphite and Erin Ventures
Assuming the 90 days horizon Focus Graphite is expected to under-perform the Erin Ventures. But the otc stock apears to be less risky and, when comparing its historical volatility, Focus Graphite is 1.29 times less risky than Erin Ventures. The otc stock trades about -0.01 of its potential returns per unit of risk. The Erin Ventures is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3.20 in Erin Ventures on September 13, 2024 and sell it today you would earn a total of 0.50 from holding Erin Ventures or generate 15.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Focus Graphite vs. Erin Ventures
Performance |
| Timeline |
| Focus Graphite |
| Erin Ventures |
Focus Graphite and Erin Ventures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Graphite and Erin Ventures
The main advantage of trading using opposite Focus Graphite and Erin Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Graphite position performs unexpectedly, Erin Ventures 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 Erin Ventures will offset losses from the drop in Erin Ventures' long position.| Focus Graphite vs. Northern Graphite | Focus Graphite vs. Syrah Resources Limited | Focus Graphite vs. Altura Mining Limited | Focus Graphite vs. Vulcan Minerals |
| Erin Ventures vs. Qubec Nickel Corp | Erin Ventures vs. IGO Limited | Erin Ventures vs. Focus Graphite | Erin Ventures vs. Mineral Res |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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