Correlation Between Nova Royalty and Eramet SA

Can any of the company-specific risk be diversified away by investing in both Nova Royalty and Eramet SA 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 Nova Royalty and Eramet SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nova Royalty Corp and Eramet SA ADR, you can compare the effects of market volatilities on Nova Royalty and Eramet SA 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 Nova Royalty with a short position of Eramet SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Royalty and Eramet SA.

Diversification Opportunities for Nova Royalty and Eramet SA

0.0

Correlation Coefficient

Nova Royalty  Eramet SA

Pay attention - limited upside

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

Pair Corralation between Nova Royalty and Eramet SA

If you would invest  535.00  in Eramet SA ADR on December 20, 2024 and sell it today you would earn a total of  114.00  from holding Eramet SA ADR or generate 21.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Nova Royalty Corp  vs.  Eramet SA ADR

Nova Royalty Corp

Risk-Adjusted Performance

Very Weak

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

Eramet SA ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eramet SA ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Eramet SA showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nova Royalty and Eramet SA

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

The idea behind Nova Royalty Corp and Eramet SA ADR 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.