Correlation Between Methanex and Idaho Strategic

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

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

Diversification Opportunities for Methanex and Idaho Strategic

-0.04

Correlation Coefficient

Methanex  Idaho Strategic

Good diversification

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

Pair Corralation between Methanex and Idaho Strategic

Given the investment horizon of 90 days Methanex is expected to under-perform the Idaho Strategic. But the stock apears to be less risky and, when comparing its historical volatility, Methanex is 1.47 times less risky than Idaho Strategic. The stock trades about -0.12 of its potential returns per unit of risk. The Idaho Strategic Resources is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,049  in Idaho Strategic Resources on December 20, 2024 and sell it today you would earn a total of  252.00  from holding Idaho Strategic Resources or generate 24.02% return on investment over 90 days.

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

Methanex  vs.  Idaho Strategic Resources

Methanex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Methanex 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 basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Idaho Strategic Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Idaho Strategic Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental indicators, Idaho Strategic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Methanex and Idaho Strategic

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

The idea behind Methanex and Idaho Strategic Resources 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.