Correlation Between NYSE Composite and Critical Metals
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Critical Metals 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 NYSE Composite and Critical Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Critical Metals Corp, you can compare the effects of market volatilities on NYSE Composite and Critical Metals 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 NYSE Composite with a short position of Critical Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Critical Metals.
Diversification Opportunities for NYSE Composite and Critical Metals
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Critical is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Critical Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Metals Corp and NYSE Composite 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 NYSE Composite are associated (or correlated) with Critical Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Metals Corp has no effect on the direction of NYSE Composite i.e., NYSE Composite and Critical Metals go up and down completely randomly.
Pair Corralation between NYSE Composite and Critical Metals
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.49 times less return on investment than Critical Metals. But when comparing it to its historical volatility, NYSE Composite is 5.65 times less risky than Critical Metals. It trades about 0.24 of its potential returns per unit of risk. Critical Metals Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 623.00 in Critical Metals Corp on August 29, 2024 and sell it today you would earn a total of 23.00 from holding Critical Metals Corp or generate 3.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Critical Metals Corp
Performance |
| Timeline |
NYSE Composite and Critical Metals Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Critical Metals Corp
Pair trading matchups for Critical Metals
Pair Trading with NYSE Composite and Critical Metals
The main advantage of trading using opposite NYSE Composite and Critical Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Critical Metals 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 Critical Metals will offset losses from the drop in Critical Metals' long position.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| Critical Metals vs. Vale SA ADR | Critical Metals vs. BHP Group Limited | Critical Metals vs. Glencore PLC ADR | Critical Metals vs. Piedmont Lithium Ltd |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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