Correlation Between MP Materials and Noranda Aluminum
Can any of the company-specific risk be diversified away by investing in both MP Materials and Noranda Aluminum 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 MP Materials and Noranda Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MP Materials Corp and Noranda Aluminum Holding, you can compare the effects of market volatilities on MP Materials and Noranda Aluminum 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 MP Materials with a short position of Noranda Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of MP Materials and Noranda Aluminum.
Diversification Opportunities for MP Materials and Noranda Aluminum
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MP Materials and Noranda is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding MP Materials Corp and Noranda Aluminum Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noranda Aluminum Holding and MP Materials 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 MP Materials Corp are associated (or correlated) with Noranda Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noranda Aluminum Holding has no effect on the direction of MP Materials i.e., MP Materials and Noranda Aluminum go up and down completely randomly.
Pair Corralation between MP Materials and Noranda Aluminum
If you would invest 1,823 in MP Materials Corp on September 2, 2024 and sell it today you would earn a total of 284.00 from holding MP Materials Corp or generate 15.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 0.0% |
| Values | Daily Returns |
MP Materials Corp vs. Noranda Aluminum Holding
Performance |
| Timeline |
| MP Materials Corp |
| Noranda Aluminum Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
MP Materials and Noranda Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MP Materials and Noranda Aluminum
The main advantage of trading using opposite MP Materials and Noranda Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MP Materials position performs unexpectedly, Noranda Aluminum 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 Noranda Aluminum will offset losses from the drop in Noranda Aluminum's long position.| MP Materials vs. Teck Resources Ltd | MP Materials vs. Sigma Lithium Resources | MP Materials vs. Vale SA ADR | MP Materials vs. Sayona Mining Limited |
| Noranda Aluminum vs. Oatly Group AB | Noranda Aluminum vs. National Vision Holdings | Noranda Aluminum vs. Titan Machinery | Noranda Aluminum vs. Diageo PLC ADR |
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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