Correlation Between DY6 Metals and Metals X

Can any of the company-specific risk be diversified away by investing in both DY6 Metals and Metals X 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 DY6 Metals and Metals X into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DY6 Metals and Metals X, you can compare the effects of market volatilities on DY6 Metals and Metals X 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 DY6 Metals with a short position of Metals X. Check out your portfolio center. Please also check ongoing floating volatility patterns of DY6 Metals and Metals X.

Diversification Opportunities for DY6 Metals and Metals X

0.61

Correlation Coefficient

DY6 Metals  Metals X

Poor diversification

The 3 months correlation between DY6 and Metals is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding DY6 Metals and Metals X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals X and DY6 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 DY6 Metals are associated (or correlated) with Metals X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals X has no effect on the direction of DY6 Metals i.e., DY6 Metals and Metals X go up and down completely randomly.

Pair Corralation between DY6 Metals and Metals X

Assuming the 90 days trading horizon DY6 Metals is expected to under-perform the Metals X. In addition to that, DY6 Metals is 1.37 times more volatile than Metals X. It trades about -0.19 of its total potential returns per unit of risk. Metals X is currently generating about -0.18 per unit of volatility. If you would invest  50.00  in Metals X on October 6, 2024 and sell it today you would lose (9.00) from holding Metals X or give up 18.0% of portfolio value over 90 days.

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

DY6 Metals  vs.  Metals X

DY6 Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DY6 Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Metals X

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metals X has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with DY6 Metals and Metals X

The main advantage of trading using opposite DY6 Metals and Metals X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DY6 Metals position performs unexpectedly, Metals X 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 Metals X will offset losses from the drop in Metals X's long position.

The idea behind DY6 Metals and Metals X 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.