Correlation Between New Age and Euro Manganese
Can any of the company-specific risk be diversified away by investing in both New Age and Euro Manganese 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 New Age and Euro Manganese into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Age Metals and Euro Manganese, you can compare the effects of market volatilities on New Age and Euro Manganese 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 New Age with a short position of Euro Manganese. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Age and Euro Manganese.
Diversification Opportunities for New Age and Euro Manganese
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Euro is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding New Age Metals and Euro Manganese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euro Manganese and New Age 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 New Age Metals are associated (or correlated) with Euro Manganese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euro Manganese has no effect on the direction of New Age i.e., New Age and Euro Manganese go up and down completely randomly.
Pair Corralation between New Age and Euro Manganese
Assuming the 90 days horizon New Age Metals is expected to under-perform the Euro Manganese. But the otc stock apears to be less risky and, when comparing its historical volatility, New Age Metals is 1.4 times less risky than Euro Manganese. The otc stock trades about -0.08 of its potential returns per unit of risk. The Euro Manganese is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2.50 in Euro Manganese on November 5, 2024 and sell it today you would earn a total of 0.95 from holding Euro Manganese or generate 38.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
New Age Metals vs. Euro Manganese
Performance |
| Timeline |
| New Age Metals |
| Euro Manganese |
New Age and Euro Manganese Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Age and Euro Manganese
The main advantage of trading using opposite New Age and Euro Manganese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Age position performs unexpectedly, Euro Manganese 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 Euro Manganese will offset losses from the drop in Euro Manganese's long position.| New Age vs. Vision Lithium | New Age vs. Group Ten Metals | New Age vs. Generation Mining Limited | New Age vs. Nickel Creek Platinum |
| Euro Manganese vs. Bravada Gold | Euro Manganese vs. Silver Spruce Resources | Euro Manganese vs. Monitor Ventures | Euro Manganese vs. Pershing Resources |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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