Correlation Between CMC Metals and Provenance Gold
Can any of the company-specific risk be diversified away by investing in both CMC Metals and Provenance 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 Provenance 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 Provenance Gold Corp, you can compare the effects of market volatilities on CMC Metals and Provenance 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 Provenance Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Metals and Provenance Gold.
Diversification Opportunities for CMC Metals and Provenance Gold
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between CMC and Provenance is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding CMC Metals and Provenance Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provenance 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 Provenance Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provenance Gold Corp has no effect on the direction of CMC Metals i.e., CMC Metals and Provenance Gold go up and down completely randomly.
Pair Corralation between CMC Metals and Provenance Gold
Assuming the 90 days horizon CMC Metals is expected to generate 16.53 times more return on investment than Provenance Gold. However, CMC Metals is 16.53 times more volatile than Provenance Gold Corp. It trades about 0.24 of its potential returns per unit of risk. Provenance Gold Corp is currently generating about 0.01 per unit of risk. If you would invest 1.00 in CMC Metals on November 5, 2024 and sell it today you would earn a total of 0.35 from holding CMC Metals or generate 35.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMC Metals vs. Provenance Gold Corp
Performance |
| Timeline |
| CMC Metals |
| Provenance Gold Corp |
CMC Metals and Provenance Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMC Metals and Provenance Gold
The main advantage of trading using opposite CMC Metals and Provenance Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMC Metals position performs unexpectedly, Provenance 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 Provenance Gold will offset losses from the drop in Provenance 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. Outcrop Gold Corp |
| Provenance Gold vs. American Creek Resources | Provenance Gold vs. New Age Metals | Provenance Gold vs. Clean Air Metals | Provenance Gold 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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