Correlation Between CSL and Metals Acquisition
Can any of the company-specific risk be diversified away by investing in both CSL and Metals Acquisition 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 CSL and Metals Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSL and Metals Acquisition Limited, you can compare the effects of market volatilities on CSL and Metals Acquisition 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 CSL with a short position of Metals Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and Metals Acquisition.
Diversification Opportunities for CSL and Metals Acquisition
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CSL and Metals is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding CSL and Metals Acquisition Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Acquisition and CSL 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 CSL are associated (or correlated) with Metals Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Acquisition has no effect on the direction of CSL i.e., CSL and Metals Acquisition go up and down completely randomly.
Pair Corralation between CSL and Metals Acquisition
Assuming the 90 days trading horizon CSL is expected to under-perform the Metals Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, CSL is 2.58 times less risky than Metals Acquisition. The stock trades about -0.11 of its potential returns per unit of risk. The Metals Acquisition Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,685 in Metals Acquisition Limited on September 2, 2024 and sell it today you would earn a total of 280.00 from holding Metals Acquisition Limited or generate 16.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSL vs. Metals Acquisition Limited
Performance |
| Timeline |
| CSL |
| Metals Acquisition |
CSL and Metals Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSL and Metals Acquisition
The main advantage of trading using opposite CSL and Metals Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL position performs unexpectedly, Metals Acquisition 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 Metals Acquisition will offset losses from the drop in Metals Acquisition's long position.| CSL vs. REGAL ASIAN INVESTMENTS | CSL vs. Argo Investments | CSL vs. Hudson Investment Group | CSL vs. Mayfield Childcare |
| Metals Acquisition vs. Land Homes Group | Metals Acquisition vs. Sandon Capital Investments | Metals Acquisition vs. Alternative Investment Trust | Metals Acquisition vs. Ragnar Metals |
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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