Correlation Between Compass Minerals and Largo Resources
Can any of the company-specific risk be diversified away by investing in both Compass Minerals and Largo Resources 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 Largo Resources 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 Largo Resources, you can compare the effects of market volatilities on Compass Minerals and Largo Resources 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 Largo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Minerals and Largo Resources.
Diversification Opportunities for Compass Minerals and Largo Resources
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Compass and Largo is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Compass Minerals International and Largo Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Largo Resources 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 Largo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Largo Resources has no effect on the direction of Compass Minerals i.e., Compass Minerals and Largo Resources go up and down completely randomly.
Pair Corralation between Compass Minerals and Largo Resources
Considering the 90-day investment horizon Compass Minerals International is expected to under-perform the Largo Resources. But the stock apears to be less risky and, when comparing its historical volatility, Compass Minerals International is 1.18 times less risky than Largo Resources. The stock trades about -0.05 of its potential returns per unit of risk. The Largo Resources is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 509.00 in Largo Resources on August 24, 2024 and sell it today you would lose (305.00) from holding Largo Resources or give up 59.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass Minerals International vs. Largo Resources
Performance |
| Timeline |
| Compass Minerals Int |
| Largo Resources |
Compass Minerals and Largo Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Minerals and Largo Resources
The main advantage of trading using opposite Compass Minerals and Largo Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Minerals position performs unexpectedly, Largo Resources 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 Largo Resources will offset losses from the drop in Largo Resources' long position.| Compass Minerals vs. MP Materials Corp | Compass Minerals vs. NioCorp Developments Ltd | Compass Minerals vs. Vale SA ADR | Compass Minerals vs. Vizsla Resources Corp |
| Largo Resources vs. Skeena Resources | Largo Resources vs. Materion | Largo Resources vs. Compass Minerals International | Largo Resources vs. IperionX Limited American |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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