Correlation Between Capitan Mining and CMC Metals
Can any of the company-specific risk be diversified away by investing in both Capitan Mining 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 Capitan Mining and CMC Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitan Mining and CMC Metals, you can compare the effects of market volatilities on Capitan Mining 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 Capitan Mining with a short position of CMC Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitan Mining and CMC Metals.
Diversification Opportunities for Capitan Mining and CMC Metals
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Capitan and CMC is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Capitan Mining and CMC Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMC Metals and Capitan Mining 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 Capitan Mining 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 Capitan Mining i.e., Capitan Mining and CMC Metals go up and down completely randomly.
Pair Corralation between Capitan Mining and CMC Metals
Assuming the 90 days horizon Capitan Mining is expected to generate 2.94 times less return on investment than CMC Metals. But when comparing it to its historical volatility, Capitan Mining is 2.17 times less risky than CMC Metals. It trades about 0.05 of its potential returns per unit of risk. CMC Metals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 14.00 in CMC Metals on September 4, 2024 and sell it today you would lose (12.41) from holding CMC Metals or give up 88.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Capitan Mining vs. CMC Metals
Performance |
| Timeline |
| Capitan Mining |
| CMC Metals |
Capitan Mining and CMC Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitan Mining and CMC Metals
The main advantage of trading using opposite Capitan Mining and CMC Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitan Mining 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.| Capitan Mining vs. Cartier Iron Corp | Capitan Mining vs. Alien Metals | Capitan Mining vs. Arctic Star Exploration | Capitan Mining 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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