Correlation Between European Residential and FPX Nickel

Can any of the company-specific risk be diversified away by investing in both European Residential and FPX Nickel 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 European Residential and FPX Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between European Residential Real and FPX Nickel Corp, you can compare the effects of market volatilities on European Residential and FPX Nickel 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 European Residential with a short position of FPX Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Residential and FPX Nickel.

Diversification Opportunities for European Residential and FPX Nickel

-0.29

Correlation Coefficient

European Residential  FPX Nickel

Very good diversification

The 3 months correlation between European and FPX is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding European Residential Real and FPX Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPX Nickel Corp and European Residential 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 European Residential Real are associated (or correlated) with FPX Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPX Nickel Corp has no effect on the direction of European Residential i.e., European Residential and FPX Nickel go up and down completely randomly.

Pair Corralation between European Residential and FPX Nickel

Assuming the 90 days trading horizon European Residential Real is expected to generate 1.28 times more return on investment than FPX Nickel. However, European Residential is 1.28 times more volatile than FPX Nickel Corp. It trades about 0.03 of its potential returns per unit of risk. FPX Nickel Corp is currently generating about -0.05 per unit of risk. If you would invest  241.00  in European Residential Real on October 10, 2024 and sell it today you would earn a total of  7.00  from holding European Residential Real or generate 2.9% return on investment over 90 days.

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

European Residential Real  vs.  FPX Nickel Corp

European Residential Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Residential Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

FPX Nickel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FPX Nickel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

Pair Trading with European Residential and FPX Nickel

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

The idea behind European Residential Real and FPX Nickel Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.