Correlation Between Metallic Minerals and Bear Creek

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

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

Diversification Opportunities for Metallic Minerals and Bear Creek

-0.4

Correlation Coefficient

Metallic Minerals  Bear Creek

Very good diversification

The 3 months correlation between Metallic and Bear is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Metallic Minerals Corp and Bear Creek Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bear Creek Mining and Metallic Minerals 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 Metallic Minerals Corp are associated (or correlated) with Bear Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bear Creek Mining has no effect on the direction of Metallic Minerals i.e., Metallic Minerals and Bear Creek go up and down completely randomly.

Pair Corralation between Metallic Minerals and Bear Creek

Assuming the 90 days horizon Metallic Minerals Corp is expected to generate 1.26 times more return on investment than Bear Creek. However, Metallic Minerals is 1.26 times more volatile than Bear Creek Mining. It trades about 0.11 of its potential returns per unit of risk. Bear Creek Mining is currently generating about -0.08 per unit of risk. If you would invest  14.00  in Metallic Minerals Corp on November 27, 2024 and sell it today you would earn a total of  5.00  from holding Metallic Minerals Corp or generate 35.71% return on investment over 90 days.

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

Metallic Minerals Corp  vs.  Bear Creek Mining

Metallic Minerals Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metallic Minerals Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Metallic Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Bear Creek Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bear Creek Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Metallic Minerals and Bear Creek

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

The idea behind Metallic Minerals Corp and Bear Creek Mining 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.