Correlation Between Future Metals and Cornish Metals
Can any of the company-specific risk be diversified away by investing in both Future Metals and Cornish 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 Future Metals and Cornish Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Future Metals NL and Cornish Metals, you can compare the effects of market volatilities on Future Metals and Cornish 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 Future Metals with a short position of Cornish Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Future Metals and Cornish Metals.
Diversification Opportunities for Future Metals and Cornish Metals
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Future and Cornish is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Future Metals NL and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals and Future 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 Future Metals NL are associated (or correlated) with Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of Future Metals i.e., Future Metals and Cornish Metals go up and down completely randomly.
Pair Corralation between Future Metals and Cornish Metals
Assuming the 90 days trading horizon Future Metals NL is expected to under-perform the Cornish Metals. But the stock apears to be less risky and, when comparing its historical volatility, Future Metals NL is 1.65 times less risky than Cornish Metals. The stock trades about -0.3 of its potential returns per unit of risk. The Cornish Metals is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 945.00 in Cornish Metals on August 31, 2024 and sell it today you would lose (75.00) from holding Cornish Metals or give up 7.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Future Metals NL vs. Cornish Metals
Performance |
| Timeline |
| Future Metals NL |
| Cornish Metals |
Future Metals and Cornish Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Future Metals and Cornish Metals
The main advantage of trading using opposite Future Metals and Cornish Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Future Metals position performs unexpectedly, Cornish 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 Cornish Metals will offset losses from the drop in Cornish Metals' long position.| Future Metals vs. G5 Entertainment AB | Future Metals vs. Cairo Communication SpA | Future Metals vs. Centaur Media | Future Metals vs. Hollywood Bowl Group |
| Cornish Metals vs. Centamin PLC | Cornish Metals vs. Anglo Asian Mining | Cornish Metals vs. Metals Exploration 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 Stocks Directory module to find actively traded stocks across global markets.
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