Correlation Between CMC Metals and Outcrop Gold
Can any of the company-specific risk be diversified away by investing in both CMC Metals and Outcrop Gold 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 Outcrop Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMC Metals and Outcrop Gold Corp, you can compare the effects of market volatilities on CMC Metals and Outcrop Gold 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 Outcrop Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Metals and Outcrop Gold.
Diversification Opportunities for CMC Metals and Outcrop Gold
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between CMC and Outcrop is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding CMC Metals and Outcrop Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outcrop Gold 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 Outcrop Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outcrop Gold Corp has no effect on the direction of CMC Metals i.e., CMC Metals and Outcrop Gold go up and down completely randomly.
Pair Corralation between CMC Metals and Outcrop Gold
Assuming the 90 days horizon CMC Metals is expected to generate 4.93 times more return on investment than Outcrop Gold. However, CMC Metals is 4.93 times more volatile than Outcrop Gold Corp. It trades about 0.06 of its potential returns per unit of risk. Outcrop Gold Corp is currently generating about -0.09 per unit of risk. If you would invest 2.00 in CMC Metals on September 4, 2024 and sell it today you would lose (0.41) from holding CMC Metals or give up 20.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
CMC Metals vs. Outcrop Gold Corp
Performance |
| Timeline |
| CMC Metals |
| Outcrop Gold Corp |
CMC Metals and Outcrop Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMC Metals and Outcrop Gold
The main advantage of trading using opposite CMC Metals and Outcrop Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMC Metals position performs unexpectedly, Outcrop Gold 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 Outcrop Gold will offset losses from the drop in Outcrop Gold's 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 |
| Outcrop Gold vs. CMC Metals | Outcrop Gold vs. Capitan Mining | Outcrop Gold vs. Cartier Iron Corp | Outcrop Gold vs. Alien 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |