Correlation Between CMC Metals and Honey Badger
Can any of the company-specific risk be diversified away by investing in both CMC Metals and Honey Badger 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 Honey Badger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMC Metals and Honey Badger Silver, you can compare the effects of market volatilities on CMC Metals and Honey Badger 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 Honey Badger. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Metals and Honey Badger.
Diversification Opportunities for CMC Metals and Honey Badger
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CMC and Honey is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding CMC Metals and Honey Badger Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honey Badger Silver 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 Honey Badger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honey Badger Silver has no effect on the direction of CMC Metals i.e., CMC Metals and Honey Badger go up and down completely randomly.
Pair Corralation between CMC Metals and Honey Badger
Assuming the 90 days horizon CMC Metals is expected to generate 4.3 times more return on investment than Honey Badger. However, CMC Metals is 4.3 times more volatile than Honey Badger Silver. It trades about 0.13 of its potential returns per unit of risk. Honey Badger Silver is currently generating about 0.03 per unit of risk. If you would invest 2.00 in CMC Metals on September 1, 2024 and sell it today you would lose (0.58) from holding CMC Metals or give up 29.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
CMC Metals vs. Honey Badger Silver
Performance |
| Timeline |
| CMC Metals |
| Honey Badger Silver |
CMC Metals and Honey Badger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMC Metals and Honey Badger
The main advantage of trading using opposite CMC Metals and Honey Badger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMC Metals position performs unexpectedly, Honey Badger 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 Honey Badger will offset losses from the drop in Honey Badger's long position.| CMC Metals vs. South32 Limited | CMC Metals vs. NioCorp Developments Ltd | CMC Metals vs. HUMANA INC | CMC Metals vs. SCOR PK |
| Honey Badger vs. Defiance Silver Corp | Honey Badger vs. HUMANA INC | Honey Badger vs. SCOR PK | Honey Badger vs. Aquagold International |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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