Correlation Between Materion and Compass Minerals
Can any of the company-specific risk be diversified away by investing in both Materion and Compass Minerals 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 Materion and Compass Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Materion and Compass Minerals International, you can compare the effects of market volatilities on Materion and Compass Minerals 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 Materion with a short position of Compass Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materion and Compass Minerals.
Diversification Opportunities for Materion and Compass Minerals
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Materion and Compass is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Materion and Compass Minerals International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Minerals Int and Materion 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 Materion are associated (or correlated) with Compass Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Minerals Int has no effect on the direction of Materion i.e., Materion and Compass Minerals go up and down completely randomly.
Pair Corralation between Materion and Compass Minerals
Given the investment horizon of 90 days Materion is expected to generate 0.52 times more return on investment than Compass Minerals. However, Materion is 1.91 times less risky than Compass Minerals. It trades about 0.17 of its potential returns per unit of risk. Compass Minerals International is currently generating about 0.08 per unit of risk. If you would invest 10,446 in Materion on August 29, 2024 and sell it today you would earn a total of 1,088 from holding Materion or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Materion vs. Compass Minerals International
Performance |
| Timeline |
| Materion |
| Compass Minerals Int |
Materion and Compass Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Materion and Compass Minerals
The main advantage of trading using opposite Materion and Compass Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materion position performs unexpectedly, Compass Minerals 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 Compass Minerals will offset losses from the drop in Compass Minerals' long position.| Materion vs. Skeena Resources | Materion vs. Compass Minerals International | Materion vs. IperionX Limited American | Materion vs. EMX Royalty Corp |
| Compass Minerals vs. Skeena Resources | Compass Minerals vs. Materion | Compass Minerals vs. IperionX Limited American | Compass Minerals vs. EMX Royalty 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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