Correlation Between Filo Mining and Sherritt International

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

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

Diversification Opportunities for Filo Mining and Sherritt International

-0.04

Correlation Coefficient

Filo Mining  Sherritt International

Good diversification

The 3 months correlation between Filo and Sherritt is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Filo Mining Corp and Sherritt International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherritt International and Filo Mining 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 Filo Mining Corp are associated (or correlated) with Sherritt International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sherritt International has no effect on the direction of Filo Mining i.e., Filo Mining and Sherritt International go up and down completely randomly.

Pair Corralation between Filo Mining and Sherritt International

Assuming the 90 days horizon Filo Mining is expected to generate 22.69 times less return on investment than Sherritt International. But when comparing it to its historical volatility, Filo Mining Corp is 19.47 times less risky than Sherritt International. It trades about 0.03 of its potential returns per unit of risk. Sherritt International is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Sherritt International on September 3, 2024 and sell it today you would lose (3.00) from holding Sherritt International or give up 20.0% of portfolio value over 90 days.

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

Filo Mining Corp  vs.  Sherritt International

Filo Mining Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Filo Mining Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Filo Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sherritt International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sherritt International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sherritt International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Filo Mining and Sherritt International

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

The idea behind Filo Mining Corp and Sherritt International 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 Commodity Directory module to find actively traded commodities issued by global exchanges.