Correlation Between Metallic Minerals and Kodiak Copper

Can any of the company-specific risk be diversified away by investing in both Metallic Minerals and Kodiak Copper 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 Kodiak Copper 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 Kodiak Copper Corp, you can compare the effects of market volatilities on Metallic Minerals and Kodiak Copper 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 Kodiak Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metallic Minerals and Kodiak Copper.

Diversification Opportunities for Metallic Minerals and Kodiak Copper

0.78

Correlation Coefficient

Metallic Minerals  Kodiak Copper

Poor diversification

The 3 months correlation between Metallic and Kodiak is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Metallic Minerals Corp and Kodiak Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kodiak Copper Corp 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 Kodiak Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kodiak Copper Corp has no effect on the direction of Metallic Minerals i.e., Metallic Minerals and Kodiak Copper go up and down completely randomly.

Pair Corralation between Metallic Minerals and Kodiak Copper

Assuming the 90 days horizon Metallic Minerals Corp is expected to generate 1.52 times more return on investment than Kodiak Copper. However, Metallic Minerals is 1.52 times more volatile than Kodiak Copper Corp. It trades about 0.19 of its potential returns per unit of risk. Kodiak Copper Corp is currently generating about 0.15 per unit of risk. If you would invest  9.37  in Metallic Minerals Corp on December 30, 2024 and sell it today you would earn a total of  7.63  from holding Metallic Minerals Corp or generate 81.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Metallic Minerals Corp  vs.  Kodiak Copper Corp

Metallic Minerals Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metallic Minerals Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Metallic Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Kodiak Copper Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Copper Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Kodiak Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metallic Minerals and Kodiak Copper

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

The idea behind Metallic Minerals Corp and Kodiak Copper 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.