Correlation Between Cleveland Cliffs and CMR SAB

Can any of the company-specific risk be diversified away by investing in both Cleveland Cliffs and CMR SAB 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 Cleveland Cliffs and CMR SAB into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cleveland Cliffs and CMR SAB de, you can compare the effects of market volatilities on Cleveland Cliffs and CMR SAB 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 Cleveland Cliffs with a short position of CMR SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cleveland Cliffs and CMR SAB.

Diversification Opportunities for Cleveland Cliffs and CMR SAB

0.69

Correlation Coefficient

Cleveland Cliffs  CMR SAB

Poor diversification

The 3 months correlation between Cleveland and CMR is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cleveland Cliffs and CMR SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMR SAB de and Cleveland Cliffs 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 Cleveland Cliffs are associated (or correlated) with CMR SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMR SAB de has no effect on the direction of Cleveland Cliffs i.e., Cleveland Cliffs and CMR SAB go up and down completely randomly.

Pair Corralation between Cleveland Cliffs and CMR SAB

Assuming the 90 days trading horizon Cleveland Cliffs is expected to generate 0.98 times more return on investment than CMR SAB. However, Cleveland Cliffs is 1.02 times less risky than CMR SAB. It trades about 0.01 of its potential returns per unit of risk. CMR SAB de is currently generating about 0.0 per unit of risk. If you would invest  18,910  in Cleveland Cliffs on December 22, 2024 and sell it today you would lose (310.00) from holding Cleveland Cliffs or give up 1.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Cleveland Cliffs  vs.  CMR SAB de

Cleveland Cliffs

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cleveland Cliffs are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Cleveland Cliffs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CMR SAB de

Risk-Adjusted Performance

Very Weak

Over the last 90 days CMR SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, CMR SAB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cleveland Cliffs and CMR SAB

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

The idea behind Cleveland Cliffs and CMR SAB de 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..