Correlation Between Ferroglobe PLC and Nouveau Monde
Can any of the company-specific risk be diversified away by investing in both Ferroglobe PLC and Nouveau Monde 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 Nouveau Monde into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferroglobe PLC and Nouveau Monde Graphite, you can compare the effects of market volatilities on Ferroglobe PLC and Nouveau Monde 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 Nouveau Monde. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferroglobe PLC and Nouveau Monde.
Diversification Opportunities for Ferroglobe PLC and Nouveau Monde
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ferroglobe and Nouveau is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ferroglobe PLC and Nouveau Monde Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nouveau Monde Graphite 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 Nouveau Monde. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nouveau Monde Graphite has no effect on the direction of Ferroglobe PLC i.e., Ferroglobe PLC and Nouveau Monde go up and down completely randomly.
Pair Corralation between Ferroglobe PLC and Nouveau Monde
Considering the 90-day investment horizon Ferroglobe PLC is expected to generate 0.73 times more return on investment than Nouveau Monde. However, Ferroglobe PLC is 1.38 times less risky than Nouveau Monde. It trades about 0.02 of its potential returns per unit of risk. Nouveau Monde Graphite is currently generating about -0.05 per unit of risk. If you would invest 400.00 in Ferroglobe PLC on August 29, 2024 and sell it today you would earn a total of 37.00 from holding Ferroglobe PLC or generate 9.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferroglobe PLC vs. Nouveau Monde Graphite
Performance |
| Timeline |
| Ferroglobe PLC |
| Nouveau Monde Graphite |
Ferroglobe PLC and Nouveau Monde Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferroglobe PLC and Nouveau Monde
The main advantage of trading using opposite Ferroglobe PLC and Nouveau Monde positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferroglobe PLC position performs unexpectedly, Nouveau Monde 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 Nouveau Monde will offset losses from the drop in Nouveau Monde's long position.| Ferroglobe PLC vs. Vale SA ADR | Ferroglobe PLC vs. BHP Group Limited | Ferroglobe PLC vs. Glencore PLC ADR | Ferroglobe PLC vs. Piedmont Lithium Ltd |
| Nouveau Monde vs. Vale SA ADR | Nouveau Monde vs. BHP Group Limited | Nouveau Monde vs. Glencore PLC ADR | Nouveau Monde vs. Piedmont Lithium Ltd |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |