Correlation Between ITALIAN WINE and Eurasia Mining
Can any of the company-specific risk be diversified away by investing in both ITALIAN WINE and Eurasia Mining 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 ITALIAN WINE and Eurasia Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITALIAN WINE BRANDS and Eurasia Mining Plc, you can compare the effects of market volatilities on ITALIAN WINE and Eurasia Mining 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 ITALIAN WINE with a short position of Eurasia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITALIAN WINE and Eurasia Mining.
Diversification Opportunities for ITALIAN WINE and Eurasia Mining
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between ITALIAN and Eurasia is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS and Eurasia Mining Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurasia Mining Plc and ITALIAN WINE 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 ITALIAN WINE BRANDS are associated (or correlated) with Eurasia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurasia Mining Plc has no effect on the direction of ITALIAN WINE i.e., ITALIAN WINE and Eurasia Mining go up and down completely randomly.
Pair Corralation between ITALIAN WINE and Eurasia Mining
Assuming the 90 days horizon ITALIAN WINE BRANDS is expected to under-perform the Eurasia Mining. But the stock apears to be less risky and, when comparing its historical volatility, ITALIAN WINE BRANDS is 3.24 times less risky than Eurasia Mining. The stock trades about -0.04 of its potential returns per unit of risk. The Eurasia Mining Plc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1.80 in Eurasia Mining Plc on November 2, 2024 and sell it today you would earn a total of 0.60 from holding Eurasia Mining Plc or generate 33.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
ITALIAN WINE BRANDS vs. Eurasia Mining Plc
Performance |
Timeline |
ITALIAN WINE BRANDS |
Eurasia Mining Plc |
ITALIAN WINE and Eurasia Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ITALIAN WINE and Eurasia Mining
The main advantage of trading using opposite ITALIAN WINE and Eurasia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE position performs unexpectedly, Eurasia Mining 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 Eurasia Mining will offset losses from the drop in Eurasia Mining's long position.ITALIAN WINE vs. Jacquet Metal Service | ITALIAN WINE vs. MONEYSUPERMARKET | ITALIAN WINE vs. Western Copper and | ITALIAN WINE vs. MAGNUM MINING EXP |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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