Correlation Between Starcore International and Emergent Metals
Can any of the company-specific risk be diversified away by investing in both Starcore International and Emergent Metals 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 Starcore International and Emergent Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starcore International Mines and Emergent Metals Corp, you can compare the effects of market volatilities on Starcore International and Emergent Metals 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 Starcore International with a short position of Emergent Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starcore International and Emergent Metals.
Diversification Opportunities for Starcore International and Emergent Metals
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Starcore and Emergent is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Starcore International Mines and Emergent Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Metals Corp and Starcore International 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 Starcore International Mines are associated (or correlated) with Emergent Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emergent Metals Corp has no effect on the direction of Starcore International i.e., Starcore International and Emergent Metals go up and down completely randomly.
Pair Corralation between Starcore International and Emergent Metals
Assuming the 90 days trading horizon Starcore International is expected to generate 3.22 times less return on investment than Emergent Metals. But when comparing it to its historical volatility, Starcore International Mines is 1.24 times less risky than Emergent Metals. It trades about 0.07 of its potential returns per unit of risk. Emergent Metals Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Emergent Metals Corp on September 5, 2024 and sell it today you would earn a total of 6.00 from holding Emergent Metals Corp or generate 120.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Starcore International Mines vs. Emergent Metals Corp
Performance |
Timeline |
Starcore International |
Emergent Metals Corp |
Starcore International and Emergent Metals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Starcore International and Emergent Metals
The main advantage of trading using opposite Starcore International and Emergent Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starcore International position performs unexpectedly, Emergent Metals 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 Emergent Metals will offset losses from the drop in Emergent Metals' long position.Starcore International vs. First Majestic Silver | Starcore International vs. Ivanhoe Energy | Starcore International vs. Orezone Gold Corp | Starcore International vs. Faraday Copper Corp |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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