Correlation Between Defense Metals and CAT Strategic
Can any of the company-specific risk be diversified away by investing in both Defense Metals and CAT Strategic 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 Defense Metals and CAT Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Defense Metals Corp and CAT Strategic Metals, you can compare the effects of market volatilities on Defense Metals and CAT Strategic 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 Defense Metals with a short position of CAT Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defense Metals and CAT Strategic.
Diversification Opportunities for Defense Metals and CAT Strategic
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Defense and CAT is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Defense Metals Corp and CAT Strategic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAT Strategic Metals and Defense Metals 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 Defense Metals Corp are associated (or correlated) with CAT Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAT Strategic Metals has no effect on the direction of Defense Metals i.e., Defense Metals and CAT Strategic go up and down completely randomly.
Pair Corralation between Defense Metals and CAT Strategic
Assuming the 90 days horizon Defense Metals is expected to generate 202.78 times less return on investment than CAT Strategic. But when comparing it to its historical volatility, Defense Metals Corp is 10.63 times less risky than CAT Strategic. It trades about 0.01 of its potential returns per unit of risk. CAT Strategic Metals is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 0.14 in CAT Strategic Metals on August 25, 2024 and sell it today you would earn a total of 0.26 from holding CAT Strategic Metals or generate 185.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Defense Metals Corp vs. CAT Strategic Metals
Performance |
| Timeline |
| Defense Metals Corp |
| CAT Strategic Metals |
Defense Metals and CAT Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Defense Metals and CAT Strategic
The main advantage of trading using opposite Defense Metals and CAT Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Defense Metals position performs unexpectedly, CAT Strategic 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 CAT Strategic will offset losses from the drop in CAT Strategic's long position.| Defense Metals vs. Edison Cobalt Corp | Defense Metals vs. Baroyeca Gold Silver | Defense Metals vs. Aurelia Metals Limited | Defense Metals vs. China Rare Earth |
| CAT Strategic vs. Glen Eagle Resources | CAT Strategic vs. Grizzly Discoveries | CAT Strategic vs. Silver Dollar Resources | CAT Strategic vs. Defense Metals 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |