Correlation Between CMC Metals and Viscount Mining
Can any of the company-specific risk be diversified away by investing in both CMC Metals and Viscount Mining 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 Viscount Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMC Metals and Viscount Mining Corp, you can compare the effects of market volatilities on CMC Metals and Viscount Mining 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 Viscount Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Metals and Viscount Mining.
Diversification Opportunities for CMC Metals and Viscount Mining
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CMC and Viscount is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding CMC Metals and Viscount Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viscount Mining 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 Viscount Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viscount Mining Corp has no effect on the direction of CMC Metals i.e., CMC Metals and Viscount Mining go up and down completely randomly.
Pair Corralation between CMC Metals and Viscount Mining
Assuming the 90 days horizon CMC Metals is expected to generate 7.33 times more return on investment than Viscount Mining. However, CMC Metals is 7.33 times more volatile than Viscount Mining Corp. It trades about 0.03 of its potential returns per unit of risk. Viscount Mining Corp is currently generating about -0.14 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 | 100.0% |
| Values | Daily Returns |
CMC Metals vs. Viscount Mining Corp
Performance |
| Timeline |
| CMC Metals |
| Viscount Mining Corp |
CMC Metals and Viscount Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMC Metals and Viscount Mining
The main advantage of trading using opposite CMC Metals and Viscount Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMC Metals position performs unexpectedly, Viscount Mining 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 Viscount Mining will offset losses from the drop in Viscount Mining's long position.| CMC Metals vs. South32 Limited | CMC Metals vs. NioCorp Developments Ltd | CMC Metals vs. HUMANA INC | CMC Metals vs. SCOR PK |
| Viscount Mining vs. Defiance Silver Corp | Viscount Mining vs. HUMANA INC | Viscount Mining vs. SCOR PK | Viscount Mining 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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