Correlation Between Nucor Corp and Hycroft Mining

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

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

Diversification Opportunities for Nucor Corp and Hycroft Mining

0.3

Correlation Coefficient

Nucor Corp  Hycroft Mining

Weak diversification

The 3 months correlation between Nucor and Hycroft is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nucor Corp and Hycroft Mining Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hycroft Mining Holding and Nucor Corp 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 Nucor Corp are associated (or correlated) with Hycroft Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hycroft Mining Holding has no effect on the direction of Nucor Corp i.e., Nucor Corp and Hycroft Mining go up and down completely randomly.

Pair Corralation between Nucor Corp and Hycroft Mining

Considering the 90-day investment horizon Nucor Corp is expected to under-perform the Hycroft Mining. But the stock apears to be less risky and, when comparing its historical volatility, Nucor Corp is 4.43 times less risky than Hycroft Mining. The stock trades about -0.06 of its potential returns per unit of risk. The Hycroft Mining Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1.90  in Hycroft Mining Holding on September 16, 2024 and sell it today you would lose (0.40) from holding Hycroft Mining Holding or give up 21.05% of portfolio value over 90 days.

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

Nucor Corp  vs.  Hycroft Mining Holding

Nucor Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nucor Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Hycroft Mining Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hycroft Mining Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Nucor Corp and Hycroft Mining

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

The idea behind Nucor Corp and Hycroft Mining Holding 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.