Correlation Between Equity Metals and Economic Investment

Can any of the company-specific risk be diversified away by investing in both Equity Metals and Economic Investment 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 Equity Metals and Economic Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Equity Metals Corp and Economic Investment Trust, you can compare the effects of market volatilities on Equity Metals and Economic Investment 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 Equity Metals with a short position of Economic Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Metals and Economic Investment.

Diversification Opportunities for Equity Metals and Economic Investment

-0.01

Correlation Coefficient

Equity Metals  Economic Investment

Good diversification

The 3 months correlation between Equity and Economic is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Equity Metals Corp and Economic Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Economic Investment Trust and Equity 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 Equity Metals Corp are associated (or correlated) with Economic Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Economic Investment Trust has no effect on the direction of Equity Metals i.e., Equity Metals and Economic Investment go up and down completely randomly.

Pair Corralation between Equity Metals and Economic Investment

Assuming the 90 days trading horizon Equity Metals Corp is expected to under-perform the Economic Investment. In addition to that, Equity Metals is 5.87 times more volatile than Economic Investment Trust. It trades about -0.08 of its total potential returns per unit of risk. Economic Investment Trust is currently generating about 0.18 per unit of volatility. If you would invest  16,477  in Economic Investment Trust on October 26, 2024 and sell it today you would earn a total of  1,873  from holding Economic Investment Trust or generate 11.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Equity Metals Corp  vs.  Economic Investment Trust

Equity Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equity Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Economic Investment Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Economic Investment Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Economic Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Equity Metals and Economic Investment

The main advantage of trading using opposite Equity Metals and Economic Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Metals position performs unexpectedly, Economic Investment 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 Economic Investment will offset losses from the drop in Economic Investment's long position.

The idea behind Equity Metals Corp and Economic Investment Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.