Correlation Between Metals X and Interra Copper
Can any of the company-specific risk be diversified away by investing in both Metals X and Interra Copper 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 X and Interra Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metals X Limited and Interra Copper Corp, you can compare the effects of market volatilities on Metals X and Interra Copper 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 X with a short position of Interra Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals X and Interra Copper.
Diversification Opportunities for Metals X and Interra Copper
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Metals and Interra is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Metals X Limited and Interra Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interra Copper Corp and Metals X 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 X Limited are associated (or correlated) with Interra Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interra Copper Corp has no effect on the direction of Metals X i.e., Metals X and Interra Copper go up and down completely randomly.
Pair Corralation between Metals X and Interra Copper
Assuming the 90 days horizon Metals X Limited is expected to under-perform the Interra Copper. But the pink sheet apears to be less risky and, when comparing its historical volatility, Metals X Limited is 3.12 times less risky than Interra Copper. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Interra Copper Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 8.39 in Interra Copper Corp on August 31, 2024 and sell it today you would lose (1.81) from holding Interra Copper Corp or give up 21.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metals X Limited vs. Interra Copper Corp
Performance |
| Timeline |
| Metals X Limited |
| Interra Copper Corp |
Metals X and Interra Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metals X and Interra Copper
The main advantage of trading using opposite Metals X and Interra Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals X position performs unexpectedly, Interra Copper 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 Interra Copper will offset losses from the drop in Interra Copper's long position.| Metals X vs. Eramet SA ADR | Metals X vs. NGEx Minerals | Metals X vs. Forum Energy Metals | Metals X vs. Adriatic Metals Plc |
| Interra Copper vs. Liontown Resources Limited | Interra Copper vs. ATT Inc | Interra Copper vs. Merck Company | Interra Copper vs. Walt Disney |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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