Correlation Between CMC Metals and First Tellurium
Can any of the company-specific risk be diversified away by investing in both CMC Metals and First Tellurium 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 First Tellurium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMC Metals and First Tellurium Corp, you can compare the effects of market volatilities on CMC Metals and First Tellurium 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 First Tellurium. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Metals and First Tellurium.
Diversification Opportunities for CMC Metals and First Tellurium
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between CMC and First is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding CMC Metals and First Tellurium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Tellurium Corp 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 First Tellurium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Tellurium Corp has no effect on the direction of CMC Metals i.e., CMC Metals and First Tellurium go up and down completely randomly.
Pair Corralation between CMC Metals and First Tellurium
Assuming the 90 days horizon CMC Metals is expected to generate 6.82 times more return on investment than First Tellurium. However, CMC Metals is 6.82 times more volatile than First Tellurium Corp. It trades about 0.05 of its potential returns per unit of risk. First Tellurium Corp is currently generating about 0.0 per unit of risk. If you would invest 2.00 in CMC Metals on August 30, 2024 and sell it today you would lose (0.50) from holding CMC Metals or give up 25.0% 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. First Tellurium Corp
Performance |
| Timeline |
| CMC Metals |
| First Tellurium Corp |
CMC Metals and First Tellurium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMC Metals and First Tellurium
The main advantage of trading using opposite CMC Metals and First Tellurium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMC Metals position performs unexpectedly, First Tellurium 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 First Tellurium will offset losses from the drop in First Tellurium's long position.| CMC Metals vs. Bravo Mining Corp | CMC Metals vs. Southern Silver Exploration | CMC Metals vs. Gatos Silver | CMC Metals vs. Outcrop Gold Corp |
| First Tellurium vs. Western Alaska Minerals | First Tellurium vs. Fabled Silver Gold | First Tellurium vs. Blackrock Silver Corp | First Tellurium vs. Brixton Metals |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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