Correlation Between Rare Element and First Energy

Can any of the company-specific risk be diversified away by investing in both Rare Element and First Energy 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 Rare Element and First Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rare Element Resources and First Energy Metals, you can compare the effects of market volatilities on Rare Element and First Energy 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 Rare Element with a short position of First Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rare Element and First Energy.

Diversification Opportunities for Rare Element and First Energy

0.0

Correlation Coefficient

Rare Element  First Energy

Pay attention - limited upside

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

Pair Corralation between Rare Element and First Energy

If you would invest  3.60  in First Energy Metals on December 28, 2024 and sell it today you would lose (1.50) from holding First Energy Metals or give up 41.67% of portfolio value over 90 days.

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

Rare Element Resources  vs.  First Energy Metals

Rare Element Resources

Risk-Adjusted Performance

Very Weak

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

First Energy Metals

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Rare Element and First Energy

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

The idea behind Rare Element Resources and First Energy Metals 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.