Correlation Between Europa Metals and Bath Body

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

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

Diversification Opportunities for Europa Metals and Bath Body

0.0

Correlation Coefficient

Europa Metals  Bath Body

Pay attention - limited upside

The 3 months correlation between Europa and Bath is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Europa Metals and Bath Body Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bath Body Works 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 Bath Body. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bath Body Works has no effect on the direction of Europa Metals i.e., Europa Metals and Bath Body go up and down completely randomly.

Pair Corralation between Europa Metals and Bath Body

Assuming the 90 days trading horizon Europa Metals is expected to under-perform the Bath Body. In addition to that, Europa Metals is 1.08 times more volatile than Bath Body Works. It trades about 0.0 of its total potential returns per unit of risk. Bath Body Works is currently generating about 0.0 per unit of volatility. If you would invest  4,215  in Bath Body Works on October 11, 2024 and sell it today you would lose (543.00) from holding Bath Body Works or give up 12.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.59%
Values	Daily Returns

Europa Metals  vs.  Bath Body Works

Europa Metals

Risk-Adjusted Performance

0 of 100

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bath Body Works

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bath Body Works are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bath Body unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Europa Metals and Bath Body

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

The idea behind Europa Metals and Bath Body Works 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.