Correlation Between CMC Metals and GMV Minerals
Can any of the company-specific risk be diversified away by investing in both CMC Metals and GMV 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 GMV 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 GMV Minerals, you can compare the effects of market volatilities on CMC Metals and GMV 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 GMV Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Metals and GMV Minerals.
Diversification Opportunities for CMC Metals and GMV Minerals
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CMC and GMV is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CMC Metals and GMV Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMV 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 GMV Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMV Minerals has no effect on the direction of CMC Metals i.e., CMC Metals and GMV Minerals go up and down completely randomly.
Pair Corralation between CMC Metals and GMV Minerals
Assuming the 90 days horizon CMC Metals is not expected to generate positive returns. Moreover, CMC Metals is 3.07 times more volatile than GMV Minerals. It trades away all of its potential returns to assume current level of volatility. GMV Minerals is currently generating about -0.28 per unit of risk. If you would invest 3.00 in CMC Metals on August 30, 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMC Metals vs. GMV Minerals
Performance |
| Timeline |
| CMC Metals |
| GMV Minerals |
CMC Metals and GMV Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMC Metals and GMV Minerals
The main advantage of trading using opposite CMC Metals and GMV Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMC Metals position performs unexpectedly, GMV 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 GMV Minerals will offset losses from the drop in GMV Minerals' long position.| CMC Metals vs. Finlay Minerals | CMC Metals vs. Altamira Gold Corp | CMC Metals vs. Tarku Resources | CMC Metals vs. GMV Minerals |
| GMV Minerals vs. Altamira Gold Corp | GMV Minerals vs. Tarku Resources | GMV Minerals vs. Finlay Minerals | GMV Minerals vs. Adamera Minerals Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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