Correlation Between CMC Metals and Integra Resources

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

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

Diversification Opportunities for CMC Metals and Integra Resources

0.18

Correlation Coefficient

CMC Metals  Integra Resources

Average diversification

The 3 months correlation between CMC and Integra is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CMC Metals and Integra Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integra Resources Corp and CMC 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 CMC Metals are associated (or correlated) with Integra Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integra Resources Corp has no effect on the direction of CMC Metals i.e., CMC Metals and Integra Resources go up and down completely randomly.

Pair Corralation between CMC Metals and Integra Resources

Assuming the 90 days horizon CMC Metals is expected to generate 11.5 times more return on investment than Integra Resources. However, CMC Metals is 11.5 times more volatile than Integra Resources Corp. It trades about 0.16 of its potential returns per unit of risk. Integra Resources Corp is currently generating about 0.01 per unit of risk. If you would invest  1.00  in CMC Metals on August 31, 2024 and sell it today you would earn a total of  0.00  from holding CMC Metals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CMC Metals  vs.  Integra Resources Corp

CMC Metals

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CMC Metals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CMC Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Integra Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integra Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Integra Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CMC Metals and Integra Resources

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

The idea behind CMC Metals and Integra Resources Corp 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 Stocks Directory module to find actively traded stocks across global markets.