Correlation Between Compass Minerals and US GoldMining
Can any of the company-specific risk be diversified away by investing in both Compass Minerals and US GoldMining 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 US GoldMining 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 US GoldMining Warrant, you can compare the effects of market volatilities on Compass Minerals and US GoldMining 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 US GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Minerals and US GoldMining.
Diversification Opportunities for Compass Minerals and US GoldMining
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Compass and USGOW is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Compass Minerals International and US GoldMining Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US GoldMining Warrant 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 US GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US GoldMining Warrant has no effect on the direction of Compass Minerals i.e., Compass Minerals and US GoldMining go up and down completely randomly.
Pair Corralation between Compass Minerals and US GoldMining
Considering the 90-day investment horizon Compass Minerals International is expected to under-perform the US GoldMining. But the stock apears to be less risky and, when comparing its historical volatility, Compass Minerals International is 3.53 times less risky than US GoldMining. The stock trades about -0.02 of its potential returns per unit of risk. The US GoldMining Warrant is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 235.00 in US GoldMining Warrant on September 1, 2024 and sell it today you would earn a total of 4.00 from holding US GoldMining Warrant or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.17% |
| Values | Daily Returns |
Compass Minerals International vs. US GoldMining Warrant
Performance |
| Timeline |
| Compass Minerals Int |
| US GoldMining Warrant |
Compass Minerals and US GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Minerals and US GoldMining
The main advantage of trading using opposite Compass Minerals and US GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Minerals position performs unexpectedly, US GoldMining 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 US GoldMining will offset losses from the drop in US GoldMining's long position.| Compass Minerals vs. Skeena Resources | Compass Minerals vs. Materion | Compass Minerals vs. IperionX Limited American | Compass Minerals vs. EMX Royalty Corp |
| US GoldMining vs. NioCorp Developments Ltd | US GoldMining vs. Teck Resources Ltd | US GoldMining vs. Sigma Lithium Resources | US GoldMining vs. MP Materials 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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