Correlation Between Europa Metals and NewFunds TRACI

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

By analyzing existing cross correlation between Europa Metals and NewFunds TRACI 3, you can compare the effects of market volatilities on Europa Metals and NewFunds TRACI 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 NewFunds TRACI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europa Metals and NewFunds TRACI.

Diversification Opportunities for Europa Metals and NewFunds TRACI

-0.49

Correlation Coefficient

Europa Metals  NewFunds TRACI

Very good diversification

The 3 months correlation between Europa and NewFunds is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Europa Metals and NewFunds TRACI 3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewFunds TRACI 3 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 NewFunds TRACI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewFunds TRACI 3 has no effect on the direction of Europa Metals i.e., Europa Metals and NewFunds TRACI go up and down completely randomly.

Pair Corralation between Europa Metals and NewFunds TRACI

Assuming the 90 days trading horizon Europa Metals is expected to under-perform the NewFunds TRACI. In addition to that, Europa Metals is 13.86 times more volatile than NewFunds TRACI 3. It trades about -0.15 of its total potential returns per unit of risk. NewFunds TRACI 3 is currently generating about 0.08 per unit of volatility. If you would invest  352,000  in NewFunds TRACI 3 on December 25, 2024 and sell it today you would earn a total of  6,100  from holding NewFunds TRACI 3 or generate 1.73% return on investment over 90 days.

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

Europa Metals  vs.  NewFunds TRACI 3

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 unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

NewFunds TRACI 3

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NewFunds TRACI 3 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NewFunds TRACI is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Europa Metals and NewFunds TRACI

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

The idea behind Europa Metals and NewFunds TRACI 3 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.