Correlation Between Europa Metals and Satrix Resi

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

By analyzing existing cross correlation between Europa Metals and Satrix Resi ETF, you can compare the effects of market volatilities on Europa Metals and Satrix Resi 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 Europa Metals with a short position of Satrix Resi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europa Metals and Satrix Resi.

Diversification Opportunities for Europa Metals and Satrix Resi

-0.75

Correlation Coefficient

Europa Metals  Satrix Resi

Pay attention - limited upside

The 3 months correlation between Europa and Satrix is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Europa Metals and Satrix Resi ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satrix Resi ETF and Europa 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 Europa Metals are associated (or correlated) with Satrix Resi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satrix Resi ETF has no effect on the direction of Europa Metals i.e., Europa Metals and Satrix Resi go up and down completely randomly.

Pair Corralation between Europa Metals and Satrix Resi

Assuming the 90 days trading horizon Europa Metals is expected to generate 23.18 times less return on investment than Satrix Resi. In addition to that, Europa Metals is 4.57 times more volatile than Satrix Resi ETF. It trades about 0.0 of its total potential returns per unit of risk. Satrix Resi ETF is currently generating about 0.25 per unit of volatility. If you would invest  555,899  in Satrix Resi ETF on December 24, 2024 and sell it today you would earn a total of  161,601  from holding Satrix Resi ETF or generate 29.07% return on investment over 90 days.

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

Europa Metals  vs.  Satrix Resi ETF

Europa Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Europa Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Europa Metals is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Satrix Resi ETF

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Satrix Resi ETF are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Satrix Resi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Europa Metals and Satrix Resi

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

The idea behind Europa Metals and Satrix Resi ETF 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..