Correlation Between NextSource Materials and Euro Manganese
Can any of the company-specific risk be diversified away by investing in both NextSource Materials 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 NextSource Materials and Euro Manganese into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NextSource Materials and Euro Manganese, you can compare the effects of market volatilities on NextSource Materials 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 NextSource Materials with a short position of Euro Manganese. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextSource Materials and Euro Manganese.
Diversification Opportunities for NextSource Materials and Euro Manganese
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NextSource and Euro is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding NextSource Materials and Euro Manganese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euro Manganese and NextSource Materials 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 NextSource Materials 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 NextSource Materials i.e., NextSource Materials and Euro Manganese go up and down completely randomly.
Pair Corralation between NextSource Materials and Euro Manganese
Assuming the 90 days horizon NextSource Materials is expected to generate 0.47 times more return on investment than Euro Manganese. However, NextSource Materials is 2.11 times less risky than Euro Manganese. It trades about -0.26 of its potential returns per unit of risk. Euro Manganese is currently generating about -0.33 per unit of risk. If you would invest 44.00 in NextSource Materials on September 1, 2024 and sell it today you would lose (7.00) from holding NextSource Materials or give up 15.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NextSource Materials vs. Euro Manganese
Performance |
| Timeline |
| NextSource Materials |
| Euro Manganese |
NextSource Materials and Euro Manganese Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NextSource Materials and Euro Manganese
The main advantage of trading using opposite NextSource Materials and Euro Manganese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextSource Materials 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.| NextSource Materials vs. Leading Edge Materials | NextSource Materials vs. Syrah Resources Limited | NextSource Materials vs. Mason Graphite | NextSource Materials vs. Graphite One |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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