Correlation Between Europa Metals and New Residential

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

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

Diversification Opportunities for Europa Metals and New Residential

0.0

Correlation Coefficient

Europa Metals  New Residential

Pay attention - limited upside

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

Pair Corralation between Europa Metals and New Residential

Assuming the 90 days trading horizon Europa Metals is expected to under-perform the New Residential. In addition to that, Europa Metals is 1.23 times more volatile than New Residential Investment. It trades about 0.0 of its total potential returns per unit of risk. New Residential Investment is currently generating about 0.05 per unit of volatility. If you would invest  722.00  in New Residential Investment on October 10, 2024 and sell it today you would earn a total of  377.00  from holding New Residential Investment or generate 52.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Europa Metals  vs.  New Residential Investment

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

New Residential Inve

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in New Residential Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, New Residential is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Europa Metals and New Residential

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

The idea behind Europa Metals and New Residential Investment 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.