Correlation Between CMC Metals and Max Resource
Can any of the company-specific risk be diversified away by investing in both CMC Metals and Max Resource 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 Max Resource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMC Metals and Max Resource Corp, you can compare the effects of market volatilities on CMC Metals and Max Resource 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 Max Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Metals and Max Resource.
Diversification Opportunities for CMC Metals and Max Resource
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between CMC and Max is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding CMC Metals and Max Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Max Resource 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 Max Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Max Resource Corp has no effect on the direction of CMC Metals i.e., CMC Metals and Max Resource go up and down completely randomly.
Pair Corralation between CMC Metals and Max Resource
Assuming the 90 days horizon CMC Metals is expected to generate 2.02 times more return on investment than Max Resource. However, CMC Metals is 2.02 times more volatile than Max Resource Corp. It trades about 0.03 of its potential returns per unit of risk. Max Resource Corp 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMC Metals vs. Max Resource Corp
Performance |
| Timeline |
| CMC Metals |
| Max Resource Corp |
CMC Metals and Max Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMC Metals and Max Resource
The main advantage of trading using opposite CMC Metals and Max Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMC Metals position performs unexpectedly, Max Resource 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 Max Resource will offset losses from the drop in Max Resource's long position.| CMC Metals vs. South32 Limited | CMC Metals vs. NioCorp Developments Ltd | CMC Metals vs. HUMANA INC | CMC Metals vs. SCOR PK |
| Max Resource vs. Defiance Silver Corp | Max Resource vs. HUMANA INC | Max Resource vs. SCOR PK | Max Resource 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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