Can any of the company-specific risk be diversified away by investing in both EMX Royalty and Ferroglobe PLC 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 EMX Royalty and Ferroglobe PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMX Royalty Corp and Ferroglobe PLC, you can compare the effects of market volatilities on EMX Royalty and Ferroglobe PLC 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 EMX Royalty with a short position of Ferroglobe PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMX Royalty and Ferroglobe PLC.
Diversification Opportunities for EMX Royalty and Ferroglobe PLC
The 3 months correlation between EMX and Ferroglobe is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding EMX Royalty Corp and Ferroglobe PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferroglobe PLC and EMX 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 EMX Royalty Corp are associated (or correlated) with Ferroglobe PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferroglobe PLC has no effect on the direction of EMX Royalty i.e., EMX Royalty and Ferroglobe PLC go up and down completely randomly.
Pair Corralation between EMX Royalty and Ferroglobe PLC
Considering the 90-day investment horizon EMX Royalty is expected to generate 8.83 times less return on investment than Ferroglobe PLC. In addition to that, EMX Royalty is 1.05 times more volatile than Ferroglobe PLC. It trades about 0.02 of its total potential returns per unit of risk. Ferroglobe PLC is currently generating about 0.2 per unit of volatility. If you would invest 543.00 in Ferroglobe PLC on March 6, 2024 and sell it today you would earn a total of 54.00 from holding Ferroglobe PLC or generate 9.94% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in EMX Royalty Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, EMX Royalty may actually be approaching a critical reversion point that can send shares even higher in July 2024.
Compared to the overall equity markets, risk-adjusted returns on investments in Ferroglobe PLC are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Ferroglobe PLC displayed solid returns over the last few months and may actually be approaching a breakup point.