Correlation Between URU Metals and Metro Bank
Can any of the company-specific risk be diversified away by investing in both URU Metals and Metro Bank 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 URU Metals and Metro Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between URU Metals and Metro Bank PLC, you can compare the effects of market volatilities on URU Metals and Metro Bank 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 URU Metals with a short position of Metro Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of URU Metals and Metro Bank.
Diversification Opportunities for URU Metals and Metro Bank
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between URU and Metro is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding URU Metals and Metro Bank PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Bank PLC and URU 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 URU Metals are associated (or correlated) with Metro Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Bank PLC has no effect on the direction of URU Metals i.e., URU Metals and Metro Bank go up and down completely randomly.
Pair Corralation between URU Metals and Metro Bank
Assuming the 90 days trading horizon URU Metals is expected to generate 1.12 times more return on investment than Metro Bank. However, URU Metals is 1.12 times more volatile than Metro Bank PLC. It trades about 0.12 of its potential returns per unit of risk. Metro Bank PLC is currently generating about 0.05 per unit of risk. If you would invest 16,000 in URU Metals on November 7, 2024 and sell it today you would earn a total of 1,000.00 from holding URU Metals or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
URU Metals vs. Metro Bank PLC
Performance |
| Timeline |
| URU Metals |
| Metro Bank PLC |
URU Metals and Metro Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with URU Metals and Metro Bank
The main advantage of trading using opposite URU Metals and Metro Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if URU Metals position performs unexpectedly, Metro Bank 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 Metro Bank will offset losses from the drop in Metro Bank's long position.| URU Metals vs. Adriatic Metals | URU Metals vs. Infrastrutture Wireless Italiane | URU Metals vs. Air Products Chemicals | URU Metals vs. Golden Metal Resources |
| Metro Bank vs. Zegona Communications Plc | Metro Bank vs. Charter Communications Cl | Metro Bank vs. Spirent Communications plc | Metro Bank vs. Scandinavian Tobacco 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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