Correlation Between Metals Exploration and Capital Metals
Can any of the company-specific risk be diversified away by investing in both Metals Exploration and Capital 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 Metals Exploration and Capital Metals 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 Capital Metals PLC, you can compare the effects of market volatilities on Metals Exploration and Capital 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 Metals Exploration with a short position of Capital Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals Exploration and Capital Metals.
Diversification Opportunities for Metals Exploration and Capital Metals
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Metals and Capital is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Metals Exploration Plc and Capital Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Metals PLC 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 Capital Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Metals PLC has no effect on the direction of Metals Exploration i.e., Metals Exploration and Capital Metals go up and down completely randomly.
Pair Corralation between Metals Exploration and Capital Metals
Assuming the 90 days trading horizon Metals Exploration Plc is expected to generate 0.69 times more return on investment than Capital Metals. However, Metals Exploration Plc is 1.44 times less risky than Capital Metals. It trades about 0.03 of its potential returns per unit of risk. Capital Metals PLC is currently generating about 0.01 per unit of risk. If you would invest 550.00 in Metals Exploration Plc on September 2, 2024 and sell it today you would earn a total of 20.00 from holding Metals Exploration Plc or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metals Exploration Plc vs. Capital Metals PLC
Performance |
| Timeline |
| Metals Exploration Plc |
| Capital Metals PLC |
Metals Exploration and Capital Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metals Exploration and Capital Metals
The main advantage of trading using opposite Metals Exploration and Capital Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals Exploration position performs unexpectedly, Capital 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 Capital Metals will offset losses from the drop in Capital Metals' long position.| Metals Exploration vs. Bankers Investment Trust | Metals Exploration vs. New Residential Investment | Metals Exploration vs. Oakley Capital Investments | Metals Exploration vs. Sydbank |
| Capital Metals vs. Givaudan SA | Capital Metals vs. Antofagasta PLC | Capital Metals vs. Centamin PLC | Capital Metals vs. Atalaya Mining |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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