Correlation Between Russel Metals and Methanex
Can any of the company-specific risk be diversified away by investing in both Russel Metals and Methanex 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 Russel Metals and Methanex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Russel Metals and Methanex, you can compare the effects of market volatilities on Russel Metals and Methanex 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 Russel Metals with a short position of Methanex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Russel Metals and Methanex.
Diversification Opportunities for Russel Metals and Methanex
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Russel and Methanex is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Russel Metals and Methanex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methanex and Russel Metals 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 Russel Metals are associated (or correlated) with Methanex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methanex has no effect on the direction of Russel Metals i.e., Russel Metals and Methanex go up and down completely randomly.
Pair Corralation between Russel Metals and Methanex
Assuming the 90 days trading horizon Russel Metals is expected to generate 1.53 times less return on investment than Methanex. In addition to that, Russel Metals is 1.22 times more volatile than Methanex. It trades about 0.25 of its total potential returns per unit of risk. Methanex is currently generating about 0.47 per unit of volatility. If you would invest 5,560 in Methanex on August 27, 2024 and sell it today you would earn a total of 997.00 from holding Methanex or generate 17.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Russel Metals vs. Methanex
Performance |
| Timeline |
| Russel Metals |
| Methanex |
Russel Metals and Methanex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Russel Metals and Methanex
The main advantage of trading using opposite Russel Metals and Methanex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Russel Metals position performs unexpectedly, Methanex 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 Methanex will offset losses from the drop in Methanex's long position.| Russel Metals vs. Finning International | Russel Metals vs. Transcontinental | Russel Metals vs. Toromont Industries | Russel Metals vs. IGM Financial |
| Methanex vs. Finning International | Methanex vs. Keyera Corp | Methanex vs. Linamar | Methanex vs. Russel Metals |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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