Correlation Between CMC Metals and Finlay Minerals
Can any of the company-specific risk be diversified away by investing in both CMC Metals and Finlay Minerals 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 CMC Metals and Finlay Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMC Metals and Finlay Minerals, you can compare the effects of market volatilities on CMC Metals and Finlay Minerals 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 CMC Metals with a short position of Finlay Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Metals and Finlay Minerals.
Diversification Opportunities for CMC Metals and Finlay Minerals
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CMC and Finlay is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CMC Metals and Finlay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finlay Minerals and CMC Metals 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 CMC Metals are associated (or correlated) with Finlay Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finlay Minerals has no effect on the direction of CMC Metals i.e., CMC Metals and Finlay Minerals go up and down completely randomly.
Pair Corralation between CMC Metals and Finlay Minerals
Assuming the 90 days horizon CMC Metals is expected to generate 1.27 times more return on investment than Finlay Minerals. However, CMC Metals is 1.27 times more volatile than Finlay Minerals. It trades about 0.07 of its potential returns per unit of risk. Finlay Minerals is currently generating about 0.07 per unit of risk. If you would invest 3.00 in CMC Metals on August 25, 2024 and sell it today you would lose (1.00) from holding CMC Metals or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMC Metals vs. Finlay Minerals
Performance |
| Timeline |
| CMC Metals |
| Finlay Minerals |
CMC Metals and Finlay Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMC Metals and Finlay Minerals
The main advantage of trading using opposite CMC Metals and Finlay Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMC Metals position performs unexpectedly, Finlay Minerals 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 Finlay Minerals will offset losses from the drop in Finlay Minerals' long position.| CMC Metals vs. First Majestic Silver | CMC Metals vs. Ivanhoe Energy | CMC Metals vs. Orezone Gold Corp | CMC Metals vs. Faraday Copper Corp |
| Finlay Minerals vs. CMC Metals | Finlay Minerals vs. Tarku Resources | Finlay Minerals vs. Highway 50 Gold |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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