Correlation Between Compass Minerals and Vizsla Resources

Can any of the company-specific risk be diversified away by investing in both Compass Minerals and Vizsla 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 Vizsla 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 Vizsla Resources Corp, you can compare the effects of market volatilities on Compass Minerals and Vizsla 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 Vizsla Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Minerals and Vizsla Resources.

Diversification Opportunities for Compass Minerals and Vizsla Resources

-0.19

Correlation Coefficient

Compass Minerals  Vizsla Resources

Good diversification

The 3 months correlation between Compass and Vizsla is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Compass Minerals International and Vizsla Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vizsla Resources Corp 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 Vizsla Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vizsla Resources Corp has no effect on the direction of Compass Minerals i.e., Compass Minerals and Vizsla Resources go up and down completely randomly.

Pair Corralation between Compass Minerals and Vizsla Resources

Considering the 90-day investment horizon Compass Minerals International is expected to generate 1.72 times more return on investment than Vizsla Resources. However, Compass Minerals is 1.72 times more volatile than Vizsla Resources Corp. It trades about 0.09 of its potential returns per unit of risk. Vizsla Resources Corp is currently generating about 0.08 per unit of risk. If you would invest  1,253  in Compass Minerals International on September 13, 2024 and sell it today you would earn a total of  108.00  from holding Compass Minerals International or generate 8.62% 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.  Vizsla Resources Corp

Compass Minerals Int

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compass Minerals International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady primary indicators, Compass Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Vizsla Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vizsla Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Compass Minerals and Vizsla Resources

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

The idea behind Compass Minerals International and Vizsla 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.

Check out your portfolio center.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.