Correlation Between Metals Creek and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Metals Creek and Dow Jones 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 Metals Creek and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metals Creek Resources and Dow Jones Industrial, you can compare the effects of market volatilities on Metals Creek and Dow Jones 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 Metals Creek with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals Creek and Dow Jones.
Diversification Opportunities for Metals Creek and Dow Jones
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metals and Dow is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Metals Creek Resources and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Metals Creek 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 Metals Creek Resources are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Metals Creek i.e., Metals Creek and Dow Jones go up and down completely randomly.
Pair Corralation between Metals Creek and Dow Jones
Assuming the 90 days horizon Metals Creek Resources is expected to generate 26.71 times more return on investment than Dow Jones. However, Metals Creek is 26.71 times more volatile than Dow Jones Industrial. It trades about 0.16 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 per unit of risk. If you would invest 1.00 in Metals Creek Resources on August 29, 2024 and sell it today you would earn a total of 1.00 from holding Metals Creek Resources or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metals Creek Resources vs. Dow Jones Industrial
Performance |
| Timeline |
Metals Creek and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Metals Creek Resources
Pair trading matchups for Metals Creek
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Metals Creek and Dow Jones
The main advantage of trading using opposite Metals Creek and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals Creek position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Metals Creek vs. Rockridge Resources | Metals Creek vs. Ameriwest Lithium | Metals Creek vs. Osisko Metals Incorporated | Metals Creek vs. Volt Lithium Corp |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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