Correlation Between Global Energy and Euro Manganese
Can any of the company-specific risk be diversified away by investing in both Global 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 Global 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 Global Energy Metals and Euro Manganese, you can compare the effects of market volatilities on Global 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 Global Energy with a short position of Euro Manganese. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Energy and Euro Manganese.
Diversification Opportunities for Global Energy and Euro Manganese
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Global and Euro is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Global 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 Global 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 Global 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 Global Energy i.e., Global Energy and Euro Manganese go up and down completely randomly.
Pair Corralation between Global Energy and Euro Manganese
Assuming the 90 days horizon Global Energy Metals is expected to generate 1.06 times more return on investment than Euro Manganese. However, Global Energy is 1.06 times more volatile than Euro Manganese. It trades about 0.04 of its potential returns per unit of risk. Euro Manganese is currently generating about 0.01 per unit of risk. If you would invest 2.15 in Global Energy Metals on November 28, 2024 and sell it today you would lose (0.46) from holding Global Energy Metals or give up 21.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.86% |
| Values | Daily Returns |
Global Energy Metals vs. Euro Manganese
Performance |
| Timeline |
| Global Energy Metals |
| Euro Manganese |
Global Energy and Euro Manganese Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Energy and Euro Manganese
The main advantage of trading using opposite Global Energy and Euro Manganese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global 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.| Global Energy vs. Golden Goliath Resources | Global Energy vs. Fireweed Zinc | Global Energy vs. Monitor Ventures | Global Energy vs. Lithium Australia NL |
| Euro Manganese vs. Bravada Gold | Euro Manganese vs. Silver Spruce Resources | Euro Manganese vs. Monitor Ventures | Euro Manganese vs. Pershing Resources |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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