Correlation Between Triple Flag and Clean Air

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

By analyzing existing cross correlation between Triple Flag Precious and Clean Air Metals, you can compare the effects of market volatilities on Triple Flag and Clean Air 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 Triple Flag with a short position of Clean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triple Flag and Clean Air.

Diversification Opportunities for Triple Flag and Clean Air

0.69

Correlation Coefficient

Triple Flag  Clean Air

Poor diversification

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

Pair Corralation between Triple Flag and Clean Air

Given the investment horizon of 90 days Triple Flag Precious is expected to generate 0.22 times more return on investment than Clean Air. However, Triple Flag Precious is 4.63 times less risky than Clean Air. It trades about -0.12 of its potential returns per unit of risk. Clean Air Metals is currently generating about -0.07 per unit of risk. If you would invest  1,714  in Triple Flag Precious on September 4, 2024 and sell it today you would lose (63.00) from holding Triple Flag Precious or give up 3.68% of portfolio value over 90 days.

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

Triple Flag Precious  vs.  Clean Air Metals

Triple Flag Precious

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Triple Flag Precious are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Triple Flag may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Clean Air Metals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Air Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Clean Air reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Triple Flag and Clean Air

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

The idea behind Triple Flag Precious and Clean Air Metals 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.