Correlation Between Metals Exploration and Auto Trader
Can any of the company-specific risk be diversified away by investing in both Metals Exploration and Auto Trader 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 Metals Exploration and Auto Trader into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metals Exploration Plc and Auto Trader Group, you can compare the effects of market volatilities on Metals Exploration and Auto Trader 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 Metals Exploration with a short position of Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals Exploration and Auto Trader.
Diversification Opportunities for Metals Exploration and Auto Trader
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Metals and Auto is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Metals Exploration Plc and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group and Metals Exploration 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 Metals Exploration Plc are associated (or correlated) with Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of Metals Exploration i.e., Metals Exploration and Auto Trader go up and down completely randomly.
Pair Corralation between Metals Exploration and Auto Trader
Assuming the 90 days trading horizon Metals Exploration Plc is expected to generate 2.3 times more return on investment than Auto Trader. However, Metals Exploration is 2.3 times more volatile than Auto Trader Group. It trades about 0.1 of its potential returns per unit of risk. Auto Trader Group is currently generating about -0.05 per unit of risk. If you would invest 515.00 in Metals Exploration Plc on August 30, 2024 and sell it today you would earn a total of 70.00 from holding Metals Exploration Plc or generate 13.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metals Exploration Plc vs. Auto Trader Group
Performance |
| Timeline |
| Metals Exploration Plc |
| Auto Trader Group |
Metals Exploration and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metals Exploration and Auto Trader
The main advantage of trading using opposite Metals Exploration and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals Exploration position performs unexpectedly, Auto Trader 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 Auto Trader will offset losses from the drop in Auto Trader's long position.| Metals Exploration vs. Cornish Metals | Metals Exploration vs. Advanced Medical Solutions | Metals Exploration vs. LPKF Laser Electronics | Metals Exploration vs. Southern Copper Corp |
| Auto Trader vs. Walmart | Auto Trader vs. BYD Co | Auto Trader vs. Volkswagen AG | Auto Trader vs. Volkswagen AG Non Vtg |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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