Correlation Between CMC Metals and Metallic Minerals

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

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

Diversification Opportunities for CMC Metals and Metallic Minerals

-0.21

Correlation Coefficient

CMC Metals  Metallic Minerals

Very good diversification

The 3 months correlation between CMC and Metallic is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding CMC Metals and Metallic Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metallic Minerals 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 Metallic Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metallic Minerals Corp has no effect on the direction of CMC Metals i.e., CMC Metals and Metallic Minerals go up and down completely randomly.

Pair Corralation between CMC Metals and Metallic Minerals

Assuming the 90 days horizon CMC Metals is expected to generate 2.67 times less return on investment than Metallic Minerals. In addition to that, CMC Metals is 2.5 times more volatile than Metallic Minerals Corp. It trades about 0.03 of its total potential returns per unit of risk. Metallic Minerals Corp is currently generating about 0.19 per unit of volatility. If you would invest  9.37  in Metallic Minerals Corp on December 29, 2024 and sell it today you would earn a total of  7.63  from holding Metallic Minerals Corp or generate 81.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.61%
Values	Daily Returns

CMC Metals  vs.  Metallic Minerals Corp

CMC Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CMC Metals are ranked lower than 2 (%) 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.

Metallic Minerals Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metallic Minerals Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Metallic Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CMC Metals and Metallic Minerals

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

The idea behind CMC Metals and Metallic Minerals 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.