Correlation Between Auxico Resources and CMC Metals
Can any of the company-specific risk be diversified away by investing in both Auxico Resources and CMC Metals 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 Auxico Resources and CMC Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auxico Resources Canada and CMC Metals, you can compare the effects of market volatilities on Auxico Resources and CMC Metals 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 Auxico Resources with a short position of CMC Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auxico Resources and CMC Metals.
Diversification Opportunities for Auxico Resources and CMC Metals
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Auxico and CMC is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Auxico Resources Canada and CMC Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMC Metals and Auxico Resources 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 Auxico Resources Canada are associated (or correlated) with CMC Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMC Metals has no effect on the direction of Auxico Resources i.e., Auxico Resources and CMC Metals go up and down completely randomly.
Pair Corralation between Auxico Resources and CMC Metals
Assuming the 90 days horizon Auxico Resources is expected to generate 1.08 times less return on investment than CMC Metals. In addition to that, Auxico Resources is 1.62 times more volatile than CMC Metals. It trades about 0.08 of its total potential returns per unit of risk. CMC Metals is currently generating about 0.13 per unit of volatility. If you would invest 2.00 in CMC Metals on September 3, 2024 and sell it today you would lose (0.41) from holding CMC Metals or give up 20.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auxico Resources Canada vs. CMC Metals
Performance |
| Timeline |
| Auxico Resources Canada |
| CMC Metals |
Auxico Resources and CMC Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auxico Resources and CMC Metals
The main advantage of trading using opposite Auxico Resources and CMC Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auxico Resources position performs unexpectedly, CMC Metals 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 CMC Metals will offset losses from the drop in CMC Metals' long position.| Auxico Resources vs. Cartier Iron Corp | Auxico Resources vs. Arctic Star Exploration | Auxico Resources vs. Capella Minerals Limited | Auxico Resources vs. Denarius Silver Corp |
| CMC Metals vs. Bravo Mining Corp | CMC Metals vs. Southern Silver Exploration | CMC Metals vs. AbraSilver Resource Corp | CMC Metals vs. Gatos Silver |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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