Correlation Between Compass Minerals and Rio Tinto
Can any of the company-specific risk be diversified away by investing in both Compass Minerals and Rio Tinto 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 Rio Tinto 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 Rio Tinto ADR, you can compare the effects of market volatilities on Compass Minerals and Rio Tinto 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 Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Minerals and Rio Tinto.
Diversification Opportunities for Compass Minerals and Rio Tinto
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Compass and Rio is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Compass Minerals International and Rio Tinto ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto ADR 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 Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto ADR has no effect on the direction of Compass Minerals i.e., Compass Minerals and Rio Tinto go up and down completely randomly.
Pair Corralation between Compass Minerals and Rio Tinto
Considering the 90-day investment horizon Compass Minerals International is expected to generate 2.07 times more return on investment than Rio Tinto. However, Compass Minerals is 2.07 times more volatile than Rio Tinto ADR. It trades about 0.23 of its potential returns per unit of risk. Rio Tinto ADR is currently generating about 0.35 per unit of risk. If you would invest 1,710 in Compass Minerals International on November 5, 2025 and sell it today you would earn a total of 919.00 from holding Compass Minerals International or generate 53.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass Minerals International vs. Rio Tinto ADR
Performance |
| Timeline |
| Compass Minerals Int |
| Rio Tinto ADR |
Compass Minerals and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Minerals and Rio Tinto
The main advantage of trading using opposite Compass Minerals and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Minerals position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| Compass Minerals vs. Nexa Resources SA | Compass Minerals vs. Lithium Argentina AG | Compass Minerals vs. American Battery Technology | Compass Minerals vs. NioCorp Developments Ltd |
| Rio Tinto vs. Southern Copper | Rio Tinto vs. BHP Group Limited | Rio Tinto vs. Vale SA ADR | Rio Tinto vs. Newmont Goldcorp Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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