Correlation Between Platinum and Micro E
Can any of the company-specific risk be diversified away by investing in both Platinum and Micro E 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 Platinum and Micro E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Platinum and Micro E mini Russell, you can compare the effects of market volatilities on Platinum and Micro E 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 Platinum with a short position of Micro E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum and Micro E.
Diversification Opportunities for Platinum and Micro E
Average diversification
The 3 months correlation between Platinum and Micro is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Platinum and Micro E mini Russell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro E mini and Platinum 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 Platinum are associated (or correlated) with Micro E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro E mini has no effect on the direction of Platinum i.e., Platinum and Micro E go up and down completely randomly.
Pair Corralation between Platinum and Micro E
Assuming the 90 days horizon Platinum is expected to under-perform the Micro E. But the commodity apears to be less risky and, when comparing its historical volatility, Platinum is 1.12 times less risky than Micro E. The commodity trades about -0.18 of its potential returns per unit of risk. The Micro E mini Russell is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 223,100 in Micro E mini Russell on August 25, 2024 and sell it today you would earn a total of 18,550 from holding Micro E mini Russell or generate 8.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Platinum vs. Micro E mini Russell
Performance |
| Timeline |
| Platinum |
| Micro E mini |
Platinum and Micro E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Platinum and Micro E
The main advantage of trading using opposite Platinum and Micro E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Platinum position performs unexpectedly, Micro E 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 Micro E will offset losses from the drop in Micro E's long position.| Platinum vs. Heating Oil | Platinum vs. Crude Oil | Platinum vs. Aluminum Futures | Platinum vs. Corn Futures |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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