Correlation Between ECN Capital and Precious Metals

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

By analyzing existing cross correlation between ECN Capital Corp and Precious Metals And, you can compare the effects of market volatilities on ECN Capital and Precious 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 ECN Capital with a short position of Precious Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECN Capital and Precious Metals.

Diversification Opportunities for ECN Capital and Precious Metals

-0.43

Correlation Coefficient

ECN Capital  Precious Metals

Very good diversification

The 3 months correlation between ECN and Precious is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding ECN Capital Corp and Precious Metals And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Metals And and ECN Capital 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 ECN Capital Corp are associated (or correlated) with Precious Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precious Metals And has no effect on the direction of ECN Capital i.e., ECN Capital and Precious Metals go up and down completely randomly.

Pair Corralation between ECN Capital and Precious Metals

Assuming the 90 days trading horizon ECN Capital Corp is expected to under-perform the Precious Metals. But the stock apears to be less risky and, when comparing its historical volatility, ECN Capital Corp is 1.18 times less risky than Precious Metals. The stock trades about -0.09 of its potential returns per unit of risk. The Precious Metals And is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  176.00  in Precious Metals And on September 13, 2024 and sell it today you would earn a total of  6.00  from holding Precious Metals And or generate 3.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ECN Capital Corp  vs.  Precious Metals And

ECN Capital Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ECN Capital Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, ECN Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

Precious Metals And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precious Metals And has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Precious Metals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ECN Capital and Precious Metals

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

The idea behind ECN Capital Corp and Precious Metals And 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.