Correlation Between Compass Minerals and Skeena Resources

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

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

Diversification Opportunities for Compass Minerals and Skeena Resources

-0.07

Correlation Coefficient

Compass Minerals  Skeena Resources

Good diversification

The 3 months correlation between Compass and Skeena is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Compass Minerals International and Skeena Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skeena Resources and Compass Minerals 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 Compass Minerals International are associated (or correlated) with Skeena Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skeena Resources has no effect on the direction of Compass Minerals i.e., Compass Minerals and Skeena Resources go up and down completely randomly.

Pair Corralation between Compass Minerals and Skeena Resources

Considering the 90-day investment horizon Compass Minerals International is expected to under-perform the Skeena Resources. In addition to that, Compass Minerals is 1.04 times more volatile than Skeena Resources. It trades about -0.05 of its total potential returns per unit of risk. Skeena Resources is currently generating about 0.09 per unit of volatility. If you would invest  871.00  in Skeena Resources on December 28, 2024 and sell it today you would earn a total of  137.00  from holding Skeena Resources or generate 15.73% return on investment over 90 days.

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

Compass Minerals International  vs.  Skeena Resources

Compass Minerals Int

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compass Minerals International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's primary indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Skeena Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Skeena Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward-looking signals, Skeena Resources exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compass Minerals and Skeena Resources

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

The idea behind Compass Minerals International and Skeena Resources 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..