Correlation Between Precious Metals and Exco Technologies
Can any of the company-specific risk be diversified away by investing in both Precious Metals and Exco Technologies 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 Precious Metals and Exco Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precious Metals And and Exco Technologies Limited, you can compare the effects of market volatilities on Precious Metals and Exco Technologies 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 Precious Metals with a short position of Exco Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precious Metals and Exco Technologies.
Diversification Opportunities for Precious Metals and Exco Technologies
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Precious and Exco is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals And and Exco Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exco Technologies and Precious 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 Precious Metals And are associated (or correlated) with Exco Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exco Technologies has no effect on the direction of Precious Metals i.e., Precious Metals and Exco Technologies go up and down completely randomly.
Pair Corralation between Precious Metals and Exco Technologies
Assuming the 90 days trading horizon Precious Metals And is expected to generate 1.5 times more return on investment than Exco Technologies. However, Precious Metals is 1.5 times more volatile than Exco Technologies Limited. It trades about -0.21 of its potential returns per unit of risk. Exco Technologies Limited is currently generating about -0.39 per unit of risk. If you would invest 190.00 in Precious Metals And on September 22, 2024 and sell it today you would lose (17.00) from holding Precious Metals And or give up 8.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precious Metals And vs. Exco Technologies Limited
Performance |
| Timeline |
| Precious Metals And |
| Exco Technologies |
Precious Metals and Exco Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precious Metals and Exco Technologies
The main advantage of trading using opposite Precious Metals and Exco Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precious Metals position performs unexpectedly, Exco Technologies 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 Exco Technologies will offset losses from the drop in Exco Technologies' long position.| Precious Metals vs. Berkshire Hathaway CDR | Precious Metals vs. E L Financial Corp | Precious Metals vs. E L Financial 3 | Precious Metals vs. Molson Coors Canada |
| Exco Technologies vs. Transcontinental | Exco Technologies vs. Methanex | Exco Technologies vs. Stella Jones | Exco Technologies vs. High Liner Foods |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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