Correlation Between Imperial Metals and HudBay Minerals

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

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

Diversification Opportunities for Imperial Metals and HudBay Minerals

0.43

Correlation Coefficient

Imperial Metals  HudBay Minerals

Very weak diversification

The 3 months correlation between Imperial and HudBay is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Metals and HudBay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HudBay Minerals and Imperial 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 Imperial Metals are associated (or correlated) with HudBay Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HudBay Minerals has no effect on the direction of Imperial Metals i.e., Imperial Metals and HudBay Minerals go up and down completely randomly.

Pair Corralation between Imperial Metals and HudBay Minerals

Assuming the 90 days trading horizon Imperial Metals is expected to under-perform the HudBay Minerals. In addition to that, Imperial Metals is 1.26 times more volatile than HudBay Minerals. It trades about -0.14 of its total potential returns per unit of risk. HudBay Minerals is currently generating about -0.08 per unit of volatility. If you would invest  1,305  in HudBay Minerals on October 9, 2024 and sell it today you would lose (64.00) from holding HudBay Minerals or give up 4.9% of portfolio value over 90 days.

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

Imperial Metals  vs.  HudBay Minerals

Imperial Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imperial Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

HudBay Minerals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HudBay Minerals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, HudBay Minerals is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Imperial Metals and HudBay Minerals

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

The idea behind Imperial Metals and HudBay Minerals 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.