Correlation Between Future Metals and URU Metals
Can any of the company-specific risk be diversified away by investing in both Future Metals and URU 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 URU 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 URU Metals, you can compare the effects of market volatilities on Future Metals and URU 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 URU Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Future Metals and URU Metals.
Diversification Opportunities for Future Metals and URU Metals
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Future and URU is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Future Metals NL and URU Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URU 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 URU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URU Metals has no effect on the direction of Future Metals i.e., Future Metals and URU Metals go up and down completely randomly.
Pair Corralation between Future Metals and URU Metals
Assuming the 90 days trading horizon Future Metals NL is expected to under-perform the URU Metals. In addition to that, Future Metals is 1.4 times more volatile than URU Metals. It trades about -0.45 of its total potential returns per unit of risk. URU Metals is currently generating about 0.01 per unit of volatility. If you would invest 16,000 in URU Metals on October 11, 2024 and sell it today you would earn a total of 0.00 from holding URU Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Future Metals NL vs. URU Metals
Performance |
| Timeline |
| Future Metals NL |
| URU Metals |
Future Metals and URU Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Future Metals and URU Metals
The main advantage of trading using opposite Future Metals and URU Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Future Metals position performs unexpectedly, URU 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 URU Metals will offset losses from the drop in URU Metals' long position.| Future Metals vs. Eastman Chemical Co | Future Metals vs. Vitec Software Group | Future Metals vs. Alien Metals | Future Metals vs. Air Products Chemicals |
| URU Metals vs. Monster Beverage Corp | URU Metals vs. Ion Beam Applications | URU Metals vs. Gamma Communications PLC | URU Metals vs. GlobalData 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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