Correlation Between Fulcrum Metals and European Metals
Can any of the company-specific risk be diversified away by investing in both Fulcrum Metals and European 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 Fulcrum Metals and European Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fulcrum Metals PLC and European Metals Holdings, you can compare the effects of market volatilities on Fulcrum Metals and European 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 Fulcrum Metals with a short position of European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulcrum Metals and European Metals.
Diversification Opportunities for Fulcrum Metals and European Metals
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fulcrum and European is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fulcrum Metals PLC and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings and Fulcrum 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 Fulcrum Metals PLC are associated (or correlated) with European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Fulcrum Metals i.e., Fulcrum Metals and European Metals go up and down completely randomly.
Pair Corralation between Fulcrum Metals and European Metals
Assuming the 90 days trading horizon Fulcrum Metals PLC is expected to generate 0.47 times more return on investment than European Metals. However, Fulcrum Metals PLC is 2.13 times less risky than European Metals. It trades about 0.0 of its potential returns per unit of risk. European Metals Holdings is currently generating about -0.36 per unit of risk. If you would invest 750.00 in Fulcrum Metals PLC on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Fulcrum Metals PLC or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fulcrum Metals PLC vs. European Metals Holdings
Performance |
| Timeline |
| Fulcrum Metals PLC |
| European Metals Holdings |
Fulcrum Metals and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fulcrum Metals and European Metals
The main advantage of trading using opposite Fulcrum Metals and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fulcrum Metals position performs unexpectedly, European 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 European Metals will offset losses from the drop in European Metals' long position.| Fulcrum Metals vs. Atalaya Mining | Fulcrum Metals vs. Anglo Asian Mining | Fulcrum Metals vs. Metals Exploration Plc |
| European Metals vs. Atalaya Mining | European Metals vs. Anglo Asian Mining | European 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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