Correlation Between Mitchells Butlers and European Metals
Can any of the company-specific risk be diversified away by investing in both Mitchells Butlers 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 Mitchells Butlers and European Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitchells Butlers PLC and European Metals Holdings, you can compare the effects of market volatilities on Mitchells Butlers 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 Mitchells Butlers with a short position of European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitchells Butlers and European Metals.
Diversification Opportunities for Mitchells Butlers and European Metals
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Mitchells and European is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Mitchells Butlers 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 Mitchells Butlers 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 Mitchells Butlers 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 Mitchells Butlers i.e., Mitchells Butlers and European Metals go up and down completely randomly.
Pair Corralation between Mitchells Butlers and European Metals
Assuming the 90 days trading horizon Mitchells Butlers PLC is expected to generate 0.66 times more return on investment than European Metals. However, Mitchells Butlers PLC is 1.51 times less risky than European Metals. It trades about 0.15 of its potential returns per unit of risk. European Metals Holdings is currently generating about -0.22 per unit of risk. If you would invest 23,350 in Mitchells Butlers PLC on September 14, 2024 and sell it today you would earn a total of 950.00 from holding Mitchells Butlers PLC or generate 4.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitchells Butlers PLC vs. European Metals Holdings
Performance |
| Timeline |
| Mitchells Butlers PLC |
| European Metals Holdings |
Mitchells Butlers and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitchells Butlers and European Metals
The main advantage of trading using opposite Mitchells Butlers and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitchells Butlers 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.| Mitchells Butlers vs. European Metals Holdings | Mitchells Butlers vs. METALL ZUG AG | Mitchells Butlers vs. Melia Hotels | Mitchells Butlers vs. InterContinental Hotels Group |
| European Metals vs. Made Tech Group | European Metals vs. Ecclesiastical Insurance Office | European Metals vs. Concurrent Technologies Plc | European Metals vs. Roper Technologies |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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