Correlation Between Hecla Mining and Reliance Steel

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

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

Diversification Opportunities for Hecla Mining and Reliance Steel

0.47

Correlation Coefficient

Hecla Mining  Reliance Steel

Very weak diversification

The 3 months correlation between Hecla and Reliance is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hecla Mining and Reliance Steel Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Steel Aluminum and Hecla 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 Hecla Mining are associated (or correlated) with Reliance Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Steel Aluminum has no effect on the direction of Hecla Mining i.e., Hecla Mining and Reliance Steel go up and down completely randomly.

Pair Corralation between Hecla Mining and Reliance Steel

Allowing for the 90-day total investment horizon Hecla Mining is expected to generate 2.41 times more return on investment than Reliance Steel. However, Hecla Mining is 2.41 times more volatile than Reliance Steel Aluminum. It trades about -0.01 of its potential returns per unit of risk. Reliance Steel Aluminum is currently generating about -0.09 per unit of risk. If you would invest  552.00  in Hecla Mining on November 28, 2024 and sell it today you would lose (28.00) from holding Hecla Mining or give up 5.07% of portfolio value over 90 days.

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

Hecla Mining  vs.  Reliance Steel Aluminum

Hecla Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hecla Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Hecla Mining is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Reliance Steel Aluminum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reliance Steel Aluminum 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 Hecla Mining and Reliance Steel

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

The idea behind Hecla Mining and Reliance Steel Aluminum 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.