Correlation Between Euro Manganese and Canada Rare

Can any of the company-specific risk be diversified away by investing in both Euro Manganese and Canada Rare 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 Euro Manganese and Canada Rare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Euro Manganese and Canada Rare Earth, you can compare the effects of market volatilities on Euro Manganese and Canada Rare 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 Euro Manganese with a short position of Canada Rare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euro Manganese and Canada Rare.

Diversification Opportunities for Euro Manganese and Canada Rare

-0.28

Correlation Coefficient

Euro Manganese  Canada Rare

Very good diversification

The 3 months correlation between Euro and Canada is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Euro Manganese and Canada Rare Earth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Rare Earth and Euro Manganese 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 Euro Manganese are associated (or correlated) with Canada Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Rare Earth has no effect on the direction of Euro Manganese i.e., Euro Manganese and Canada Rare go up and down completely randomly.

Pair Corralation between Euro Manganese and Canada Rare

If you would invest  2.10  in Euro Manganese on December 28, 2024 and sell it today you would earn a total of  2.10  from holding Euro Manganese or generate 100.0% return on investment over 90 days.

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

Euro Manganese  vs.  Canada Rare Earth

Euro Manganese

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Euro Manganese are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Euro Manganese reported solid returns over the last few months and may actually be approaching a breakup point.

Canada Rare Earth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canada Rare Earth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Canada Rare is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Euro Manganese and Canada Rare

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

The idea behind Euro Manganese and Canada Rare Earth 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.