Correlation Between Metals One and FirstGroup PLC

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

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

Diversification Opportunities for Metals One and FirstGroup PLC

-0.46

Correlation Coefficient

Metals One  FirstGroup PLC

Very good diversification

The 3 months correlation between Metals and FirstGroup is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Metals One PLC and FirstGroup PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstGroup PLC and Metals One 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 Metals One PLC are associated (or correlated) with FirstGroup PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstGroup PLC has no effect on the direction of Metals One i.e., Metals One and FirstGroup PLC go up and down completely randomly.

Pair Corralation between Metals One and FirstGroup PLC

Assuming the 90 days trading horizon Metals One PLC is expected to generate 7.64 times more return on investment than FirstGroup PLC. However, Metals One is 7.64 times more volatile than FirstGroup PLC. It trades about 0.04 of its potential returns per unit of risk. FirstGroup PLC is currently generating about 0.27 per unit of risk. If you would invest  1,550  in Metals One PLC on April 24, 2025 and sell it today you would lose (460.00) from holding Metals One PLC or give up 29.68% of portfolio value over 90 days.

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

Metals One PLC  vs.  FirstGroup PLC

Metals One PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metals One PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Metals One unveiled solid returns over the last few months and may actually be approaching a breakup point.

FirstGroup PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FirstGroup PLC are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, FirstGroup PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metals One and FirstGroup PLC

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

The idea behind Metals One PLC and FirstGroup PLC 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.