Correlation Between Panther Metals and Cairn Homes
Can any of the company-specific risk be diversified away by investing in both Panther Metals and Cairn Homes 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 Panther Metals and Cairn Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Panther Metals PLC and Cairn Homes PLC, you can compare the effects of market volatilities on Panther Metals and Cairn Homes 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 Panther Metals with a short position of Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panther Metals and Cairn Homes.
Diversification Opportunities for Panther Metals and Cairn Homes
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Panther and Cairn is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Panther Metals PLC and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC and Panther Metals 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 Panther Metals PLC are associated (or correlated) with Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of Panther Metals i.e., Panther Metals and Cairn Homes go up and down completely randomly.
Pair Corralation between Panther Metals and Cairn Homes
Assuming the 90 days trading horizon Panther Metals PLC is expected to under-perform the Cairn Homes. In addition to that, Panther Metals is 2.34 times more volatile than Cairn Homes PLC. It trades about -0.54 of its total potential returns per unit of risk. Cairn Homes PLC is currently generating about 0.27 per unit of volatility. If you would invest 17,540 in Cairn Homes PLC on September 20, 2024 and sell it today you would earn a total of 1,500 from holding Cairn Homes PLC or generate 8.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Panther Metals PLC vs. Cairn Homes PLC
Performance |
Timeline |
Panther Metals PLC |
Cairn Homes PLC |
Panther Metals and Cairn Homes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Panther Metals and Cairn Homes
The main advantage of trading using opposite Panther Metals and Cairn Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Panther Metals position performs unexpectedly, Cairn Homes 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 Cairn Homes will offset losses from the drop in Cairn Homes' long position.Panther Metals vs. FC Investment Trust | Panther Metals vs. PureTech Health plc | Panther Metals vs. Hansa Investment | Panther Metals vs. Allianz Technology Trust |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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