Correlation Between Metals Exploration and European Metals
Can any of the company-specific risk be diversified away by investing in both Metals Exploration 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 Metals Exploration and European 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 European Metals Holdings, you can compare the effects of market volatilities on Metals Exploration 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 Metals Exploration with a short position of European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals Exploration and European Metals.
Diversification Opportunities for Metals Exploration and European Metals
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metals and European is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Metals Exploration 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 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 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 Metals Exploration i.e., Metals Exploration and European Metals go up and down completely randomly.
Pair Corralation between Metals Exploration and European Metals
Assuming the 90 days trading horizon Metals Exploration Plc is expected to under-perform the European Metals. In addition to that, Metals Exploration is 1.21 times more volatile than European Metals Holdings. It trades about -0.07 of its total potential returns per unit of risk. European Metals Holdings is currently generating about -0.04 per unit of volatility. If you would invest 795.00 in European Metals Holdings on November 7, 2024 and sell it today you would lose (70.00) from holding European Metals Holdings or give up 8.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metals Exploration Plc vs. European Metals Holdings
Performance |
| Timeline |
| Metals Exploration Plc |
| European Metals Holdings |
Metals Exploration and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metals Exploration and European Metals
The main advantage of trading using opposite Metals Exploration and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals Exploration 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.| Metals Exploration vs. Verizon Communications | Metals Exploration vs. Fair Oaks Income | Metals Exploration vs. Telecom Italia SpA | Metals Exploration vs. Zegona Communications Plc |
| European Metals vs. Tyson Foods Cl | European Metals vs. Ross Stores | European Metals vs. Geely Automobile Holdings | European Metals vs. Aeorema Communications Plc |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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