Correlation Between Idaho Strategic and BTU Metals

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

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

Diversification Opportunities for Idaho Strategic and BTU Metals

-0.35

Correlation Coefficient

Idaho Strategic  BTU Metals

Very good diversification

The 3 months correlation between Idaho and BTU is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Idaho Strategic Resources and BTU Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTU Metals Corp and Idaho Strategic 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 Idaho Strategic Resources are associated (or correlated) with BTU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTU Metals Corp has no effect on the direction of Idaho Strategic i.e., Idaho Strategic and BTU Metals go up and down completely randomly.

Pair Corralation between Idaho Strategic and BTU Metals

Considering the 90-day investment horizon Idaho Strategic is expected to generate 1.18 times less return on investment than BTU Metals. But when comparing it to its historical volatility, Idaho Strategic Resources is 1.06 times less risky than BTU Metals. It trades about 0.21 of its potential returns per unit of risk. BTU Metals Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1.79  in BTU Metals Corp on October 23, 2024 and sell it today you would earn a total of  0.21  from holding BTU Metals Corp or generate 11.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Idaho Strategic Resources  vs.  BTU Metals Corp

Idaho Strategic Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Idaho Strategic Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

BTU Metals Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BTU Metals Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, BTU Metals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Idaho Strategic and BTU Metals

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

The idea behind Idaho Strategic Resources and BTU Metals 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.