Correlation Between Mountain Boy and Metallic Minerals

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

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

Diversification Opportunities for Mountain Boy and Metallic Minerals

0.69

Correlation Coefficient

Mountain Boy  Metallic Minerals

Poor diversification

The 3 months correlation between Mountain and Metallic is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Mountain Boy Minerals and Metallic Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metallic Minerals Corp and Mountain Boy 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 Mountain Boy Minerals are associated (or correlated) with Metallic Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metallic Minerals Corp has no effect on the direction of Mountain Boy i.e., Mountain Boy and Metallic Minerals go up and down completely randomly.

Pair Corralation between Mountain Boy and Metallic Minerals

Assuming the 90 days horizon Mountain Boy Minerals is expected to generate 1.81 times more return on investment than Metallic Minerals. However, Mountain Boy is 1.81 times more volatile than Metallic Minerals Corp. It trades about 0.04 of its potential returns per unit of risk. Metallic Minerals Corp is currently generating about -0.05 per unit of risk. If you would invest  1.44  in Mountain Boy Minerals on August 31, 2024 and sell it today you would lose (0.20) from holding Mountain Boy Minerals or give up 13.89% of portfolio value over 90 days.

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

Mountain Boy Minerals  vs.  Metallic Minerals Corp

Mountain Boy Minerals

Risk-Adjusted Performance

3 of 100

Insignificant

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

Metallic Minerals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metallic Minerals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Mountain Boy and Metallic Minerals

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

The idea behind Mountain Boy Minerals and Metallic Minerals 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.