Correlation Between Europa Metals and Pets At

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

By analyzing existing cross correlation between Europa Metals and Pets at Home, you can compare the effects of market volatilities on Europa Metals and Pets At 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 Europa Metals with a short position of Pets At. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europa Metals and Pets At.

Diversification Opportunities for Europa Metals and Pets At

0.15

Correlation Coefficient

Europa Metals  Pets At

Average diversification

The 3 months correlation between Europa and Pets is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Europa Metals and Pets at Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pets at Home and Europa Metals 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 Europa Metals are associated (or correlated) with Pets At. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pets at Home has no effect on the direction of Europa Metals i.e., Europa Metals and Pets At go up and down completely randomly.

Pair Corralation between Europa Metals and Pets At

Assuming the 90 days trading horizon Europa Metals is expected to under-perform the Pets At. In addition to that, Europa Metals is 1.09 times more volatile than Pets at Home. It trades about -0.13 of its total potential returns per unit of risk. Pets at Home is currently generating about 0.09 per unit of volatility. If you would invest  22,495  in Pets at Home on April 24, 2025 and sell it today you would earn a total of  1,705  from holding Pets at Home or generate 7.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Europa Metals  vs.  Pets at Home

Europa Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Europa Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pets at Home

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pets at Home are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Pets At may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Europa Metals and Pets At

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

The idea behind Europa Metals and Pets at Home 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.