Correlation Between CMC Metals and Auxico Resources
Can any of the company-specific risk be diversified away by investing in both CMC Metals and Auxico Resources 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 Auxico Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMC Metals and Auxico Resources Canada, you can compare the effects of market volatilities on CMC Metals and Auxico Resources 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 Auxico Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Metals and Auxico Resources.
Diversification Opportunities for CMC Metals and Auxico Resources
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between CMC and Auxico is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding CMC Metals and Auxico Resources Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auxico Resources Canada 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 Auxico Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auxico Resources Canada has no effect on the direction of CMC Metals i.e., CMC Metals and Auxico Resources go up and down completely randomly.
Pair Corralation between CMC Metals and Auxico Resources
Assuming the 90 days horizon CMC Metals is expected to generate 2.22 times less return on investment than Auxico Resources. But when comparing it to its historical volatility, CMC Metals is 2.23 times less risky than Auxico Resources. It trades about 0.07 of its potential returns per unit of risk. Auxico Resources Canada is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 37.00 in Auxico Resources Canada on September 3, 2024 and sell it today you would lose (36.40) from holding Auxico Resources Canada or give up 98.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMC Metals vs. Auxico Resources Canada
Performance |
| Timeline |
| CMC Metals |
| Auxico Resources Canada |
CMC Metals and Auxico Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMC Metals and Auxico Resources
The main advantage of trading using opposite CMC Metals and Auxico Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMC Metals position performs unexpectedly, Auxico Resources 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 Auxico Resources will offset losses from the drop in Auxico Resources' long position.| CMC Metals vs. Bravo Mining Corp | CMC Metals vs. Southern Silver Exploration | CMC Metals vs. AbraSilver Resource Corp | CMC Metals vs. Gatos Silver |
| Auxico Resources vs. Cartier Iron Corp | Auxico Resources vs. Arctic Star Exploration | Auxico Resources vs. Capella Minerals Limited | Auxico Resources vs. Denarius Silver 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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