Correlation Between Falcon Metals and MetalsGrove Mining

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

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

Diversification Opportunities for Falcon Metals and MetalsGrove Mining

-0.14

Correlation Coefficient

Falcon Metals  MetalsGrove Mining

Good diversification

The 3 months correlation between Falcon and MetalsGrove is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and MetalsGrove Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetalsGrove Mining and Falcon 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 Falcon Metals are associated (or correlated) with MetalsGrove Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetalsGrove Mining has no effect on the direction of Falcon Metals i.e., Falcon Metals and MetalsGrove Mining go up and down completely randomly.

Pair Corralation between Falcon Metals and MetalsGrove Mining

Assuming the 90 days trading horizon Falcon Metals is expected to generate 3.4 times less return on investment than MetalsGrove Mining. But when comparing it to its historical volatility, Falcon Metals is 1.02 times less risky than MetalsGrove Mining. It trades about 0.02 of its potential returns per unit of risk. MetalsGrove Mining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4.20  in MetalsGrove Mining on December 4, 2024 and sell it today you would earn a total of  1.60  from holding MetalsGrove Mining or generate 38.1% return on investment over 90 days.

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

Falcon Metals  vs.  MetalsGrove Mining

Falcon Metals

Risk-Adjusted Performance

Very Weak

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

MetalsGrove Mining

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MetalsGrove Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MetalsGrove Mining may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Falcon Metals and MetalsGrove Mining

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

The idea behind Falcon Metals and MetalsGrove Mining 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.