Correlation Between Sky Metals and EROAD
Can any of the company-specific risk be diversified away by investing in both Sky Metals and EROAD 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 Sky Metals and EROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sky Metals and EROAD, you can compare the effects of market volatilities on Sky Metals and EROAD 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 Sky Metals with a short position of EROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Metals and EROAD.
Diversification Opportunities for Sky Metals and EROAD
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sky and EROAD is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sky Metals and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD and Sky 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 Sky Metals are associated (or correlated) with EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of Sky Metals i.e., Sky Metals and EROAD go up and down completely randomly.
Pair Corralation between Sky Metals and EROAD
Assuming the 90 days trading horizon Sky Metals is expected to generate 1.25 times more return on investment than EROAD. However, Sky Metals is 1.25 times more volatile than EROAD. It trades about 0.07 of its potential returns per unit of risk. EROAD is currently generating about 0.0 per unit of risk. If you would invest 3.90 in Sky Metals on September 1, 2024 and sell it today you would earn a total of 1.20 from holding Sky Metals or generate 30.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sky Metals vs. EROAD
Performance |
| Timeline |
| Sky Metals |
| EROAD |
Sky Metals and EROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sky Metals and EROAD
The main advantage of trading using opposite Sky Metals and EROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Metals position performs unexpectedly, EROAD 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 EROAD will offset losses from the drop in EROAD's long position.| Sky Metals vs. Carnegie Clean Energy | Sky Metals vs. Nufarm Finance NZ | Sky Metals vs. Richmond Vanadium Technology | Sky Metals vs. Macquarie Technology Group |
| EROAD vs. Centuria Industrial Reit | EROAD vs. Sky Metals | EROAD vs. The Environmental Group | EROAD vs. Qbe Insurance Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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