Correlation Between First Energy and Euro Manganese
Can any of the company-specific risk be diversified away by investing in both First Energy and Euro Manganese 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 First Energy and Euro Manganese into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Energy Metals and Euro Manganese, you can compare the effects of market volatilities on First Energy and Euro Manganese 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 First Energy with a short position of Euro Manganese. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Energy and Euro Manganese.
Diversification Opportunities for First Energy and Euro Manganese
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Euro is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding First Energy Metals and Euro Manganese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euro Manganese and First Energy 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 First Energy Metals are associated (or correlated) with Euro Manganese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euro Manganese has no effect on the direction of First Energy i.e., First Energy and Euro Manganese go up and down completely randomly.
Pair Corralation between First Energy and Euro Manganese
Assuming the 90 days horizon First Energy is expected to generate 3.54 times less return on investment than Euro Manganese. In addition to that, First Energy is 1.11 times more volatile than Euro Manganese. It trades about 0.0 of its total potential returns per unit of risk. Euro Manganese is currently generating about 0.02 per unit of volatility. If you would invest 4.60 in Euro Manganese on October 26, 2024 and sell it today you would lose (1.80) from holding Euro Manganese or give up 39.13% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
First Energy Metals vs. Euro Manganese
Performance |
Timeline |
First Energy Metals |
Euro Manganese |
First Energy and Euro Manganese Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Energy and Euro Manganese
The main advantage of trading using opposite First Energy and Euro Manganese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Energy position performs unexpectedly, Euro Manganese 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 Euro Manganese will offset losses from the drop in Euro Manganese's long position.First Energy vs. MCF Energy | First Energy vs. Hypercharge Networks Corp | First Energy vs. Traction Uranium Corp | First Energy vs. F3 Uranium Corp |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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