Correlation Between Ferroglobe PLC and Materion
Can any of the company-specific risk be diversified away by investing in both Ferroglobe PLC and Materion 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 Ferroglobe PLC and Materion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferroglobe PLC and Materion, you can compare the effects of market volatilities on Ferroglobe PLC and Materion 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 Ferroglobe PLC with a short position of Materion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferroglobe PLC and Materion.
Diversification Opportunities for Ferroglobe PLC and Materion
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ferroglobe and Materion is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ferroglobe PLC and Materion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materion and Ferroglobe PLC 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 Ferroglobe PLC are associated (or correlated) with Materion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materion has no effect on the direction of Ferroglobe PLC i.e., Ferroglobe PLC and Materion go up and down completely randomly.
Pair Corralation between Ferroglobe PLC and Materion
Considering the 90-day investment horizon Ferroglobe PLC is expected to generate 4.59 times less return on investment than Materion. In addition to that, Ferroglobe PLC is 1.07 times more volatile than Materion. It trades about 0.01 of its total potential returns per unit of risk. Materion is currently generating about 0.03 per unit of volatility. If you would invest 8,616 in Materion on November 2, 2024 and sell it today you would earn a total of 1,541 from holding Materion or generate 17.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferroglobe PLC vs. Materion
Performance |
| Timeline |
| Ferroglobe PLC |
| Materion |
Ferroglobe PLC and Materion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferroglobe PLC and Materion
The main advantage of trading using opposite Ferroglobe PLC and Materion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferroglobe PLC position performs unexpectedly, Materion 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 Materion will offset losses from the drop in Materion's long position.| Ferroglobe PLC vs. Fury Gold Mines | Ferroglobe PLC vs. IperionX Limited American | Ferroglobe PLC vs. EMX Royalty Corp | Ferroglobe PLC vs. Materion |
| Materion vs. Skeena Resources | Materion vs. Compass Minerals International | Materion vs. IperionX Limited American | Materion vs. EMX Royalty Corp |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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