Correlation Between Starr Peak and European Metals
Can any of the company-specific risk be diversified away by investing in both Starr Peak and European Metals 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 Starr Peak and European Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starr Peak Exploration and European Metals Holdings, you can compare the effects of market volatilities on Starr Peak and European Metals 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 Starr Peak with a short position of European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starr Peak and European Metals.
Diversification Opportunities for Starr Peak and European Metals
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Starr and European is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Starr Peak Exploration and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings and Starr Peak 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 Starr Peak Exploration are associated (or correlated) with European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Starr Peak i.e., Starr Peak and European Metals go up and down completely randomly.
Pair Corralation between Starr Peak and European Metals
Assuming the 90 days horizon Starr Peak is expected to generate 1.84 times less return on investment than European Metals. But when comparing it to its historical volatility, Starr Peak Exploration is 1.24 times less risky than European Metals. It trades about 0.04 of its potential returns per unit of risk. European Metals Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 11.00 in European Metals Holdings on August 29, 2024 and sell it today you would earn a total of 1.00 from holding European Metals Holdings or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Starr Peak Exploration vs. European Metals Holdings
Performance |
| Timeline |
| Starr Peak Exploration |
| European Metals Holdings |
Starr Peak and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Starr Peak and European Metals
The main advantage of trading using opposite Starr Peak and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starr Peak position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.| Starr Peak vs. Ameriwest Lithium | Starr Peak vs. American Lithium Corp | Starr Peak vs. Global Helium Corp | Starr Peak vs. ZincX Resources Corp |
| European Metals vs. Aurelia Metals Limited | European Metals vs. Centaurus Metals Limited | European Metals vs. Artemis Resources | European Metals vs. Ascendant 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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