Correlation Between Power Metal and Centaur Media
Can any of the company-specific risk be diversified away by investing in both Power Metal and Centaur Media 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 Power Metal and Centaur Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Metal Resources and Centaur Media, you can compare the effects of market volatilities on Power Metal and Centaur Media 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 Power Metal with a short position of Centaur Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Metal and Centaur Media.
Diversification Opportunities for Power Metal and Centaur Media
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Power and Centaur is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Power Metal Resources and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media and Power Metal 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 Power Metal Resources are associated (or correlated) with Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of Power Metal i.e., Power Metal and Centaur Media go up and down completely randomly.
Pair Corralation between Power Metal and Centaur Media
Assuming the 90 days trading horizon Power Metal Resources is expected to generate 1.73 times more return on investment than Centaur Media. However, Power Metal is 1.73 times more volatile than Centaur Media. It trades about -0.01 of its potential returns per unit of risk. Centaur Media is currently generating about -0.02 per unit of risk. If you would invest 2,800 in Power Metal Resources on September 2, 2024 and sell it today you would lose (1,337) from holding Power Metal Resources or give up 47.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Metal Resources vs. Centaur Media
Performance |
| Timeline |
| Power Metal Resources |
| Centaur Media |
Power Metal and Centaur Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Metal and Centaur Media
The main advantage of trading using opposite Power Metal and Centaur Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Metal position performs unexpectedly, Centaur Media 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 Centaur Media will offset losses from the drop in Centaur Media's long position.| Power Metal vs. Givaudan SA | Power Metal vs. Antofagasta PLC | Power Metal vs. Centamin PLC | Power Metal vs. Atalaya Mining |
| Centaur Media vs. FC Investment Trust | Centaur Media vs. MoneysupermarketCom Group PLC | Centaur Media vs. Molson Coors Beverage | Centaur Media vs. CAP LEASE AVIATION |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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