Correlation Between Metro Bank and CleanTech Lithium
Can any of the company-specific risk be diversified away by investing in both Metro Bank and CleanTech Lithium 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 Metro Bank and CleanTech Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Bank PLC and CleanTech Lithium plc, you can compare the effects of market volatilities on Metro Bank and CleanTech Lithium 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 Metro Bank with a short position of CleanTech Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Bank and CleanTech Lithium.
Diversification Opportunities for Metro Bank and CleanTech Lithium
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Metro and CleanTech is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Metro Bank PLC and CleanTech Lithium plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanTech Lithium plc and Metro Bank 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 Metro Bank PLC are associated (or correlated) with CleanTech Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanTech Lithium plc has no effect on the direction of Metro Bank i.e., Metro Bank and CleanTech Lithium go up and down completely randomly.
Pair Corralation between Metro Bank and CleanTech Lithium
Assuming the 90 days trading horizon Metro Bank PLC is expected to generate 0.55 times more return on investment than CleanTech Lithium. However, Metro Bank PLC is 1.82 times less risky than CleanTech Lithium. It trades about 0.13 of its potential returns per unit of risk. CleanTech Lithium plc is currently generating about 0.02 per unit of risk. If you would invest 9,650 in Metro Bank PLC on November 6, 2024 and sell it today you would earn a total of 570.00 from holding Metro Bank PLC or generate 5.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Bank PLC vs. CleanTech Lithium plc
Performance |
| Timeline |
| Metro Bank PLC |
| CleanTech Lithium plc |
Metro Bank and CleanTech Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Bank and CleanTech Lithium
The main advantage of trading using opposite Metro Bank and CleanTech Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Bank position performs unexpectedly, CleanTech Lithium 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 CleanTech Lithium will offset losses from the drop in CleanTech Lithium's long position.| Metro Bank vs. Roadside Real Estate | Metro Bank vs. Playtech Plc | Metro Bank vs. Raytheon Technologies Corp | Metro Bank vs. Sartorius Stedim Biotech |
| CleanTech Lithium vs. Gamma Communications PLC | CleanTech Lithium vs. Verizon Communications | CleanTech Lithium vs. Clean Power Hydrogen | CleanTech Lithium vs. Fonix Mobile 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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