Correlation Between Compass Minerals and Critical Metals
Can any of the company-specific risk be diversified away by investing in both Compass Minerals and Critical Metals 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 Compass Minerals and Critical Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Minerals International and Critical Metals Corp, you can compare the effects of market volatilities on Compass Minerals and Critical Metals 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 Compass Minerals with a short position of Critical Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Minerals and Critical Metals.
Diversification Opportunities for Compass Minerals and Critical Metals
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Compass and Critical is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Compass Minerals International and Critical Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Metals Corp and Compass Minerals 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 Compass Minerals International are associated (or correlated) with Critical Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Metals Corp has no effect on the direction of Compass Minerals i.e., Compass Minerals and Critical Metals go up and down completely randomly.
Pair Corralation between Compass Minerals and Critical Metals
Considering the 90-day investment horizon Compass Minerals International is expected to generate 1.47 times more return on investment than Critical Metals. However, Compass Minerals is 1.47 times more volatile than Critical Metals Corp. It trades about 0.1 of its potential returns per unit of risk. Critical Metals Corp is currently generating about -0.04 per unit of risk. If you would invest 1,347 in Compass Minerals International on August 25, 2024 and sell it today you would earn a total of 136.00 from holding Compass Minerals International or generate 10.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass Minerals International vs. Critical Metals Corp
Performance |
| Timeline |
| Compass Minerals Int |
| Critical Metals Corp |
Compass Minerals and Critical Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Minerals and Critical Metals
The main advantage of trading using opposite Compass Minerals and Critical Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Minerals position performs unexpectedly, Critical Metals 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 Critical Metals will offset losses from the drop in Critical Metals' long position.| Compass Minerals vs. Vale SA ADR | Compass Minerals vs. Teck Resources Ltd | Compass Minerals vs. MP Materials Corp | Compass Minerals vs. Lithium Americas Corp |
| Critical Metals vs. Relx PLC ADR | Critical Metals vs. WEBTOON Entertainment Common | Critical Metals vs. AMREP | Critical Metals vs. Afya |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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