Correlation Between Sterling Metals and Benton Resources
Can any of the company-specific risk be diversified away by investing in both Sterling Metals and Benton Resources 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 Sterling Metals and Benton Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Metals Corp and Benton Resources, you can compare the effects of market volatilities on Sterling Metals and Benton Resources 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 Sterling Metals with a short position of Benton Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Metals and Benton Resources.
Diversification Opportunities for Sterling Metals and Benton Resources
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sterling and Benton is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Metals Corp and Benton Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benton Resources and Sterling 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 Sterling Metals Corp are associated (or correlated) with Benton Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benton Resources has no effect on the direction of Sterling Metals i.e., Sterling Metals and Benton Resources go up and down completely randomly.
Pair Corralation between Sterling Metals and Benton Resources
Assuming the 90 days horizon Sterling Metals is expected to generate 5.52 times less return on investment than Benton Resources. But when comparing it to its historical volatility, Sterling Metals Corp is 1.75 times less risky than Benton Resources. It trades about 0.03 of its potential returns per unit of risk. Benton Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Benton Resources on August 26, 2024 and sell it today you would lose (4.50) from holding Benton Resources or give up 40.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Metals Corp vs. Benton Resources
Performance |
| Timeline |
| Sterling Metals Corp |
| Benton Resources |
Sterling Metals and Benton Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Metals and Benton Resources
The main advantage of trading using opposite Sterling Metals and Benton Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Metals position performs unexpectedly, Benton Resources 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 Benton Resources will offset losses from the drop in Benton Resources' long position.| Sterling Metals vs. Norra Metals Corp | Sterling Metals vs. ZincX Resources Corp | Sterling Metals vs. Nuinsco Resources Limited | Sterling Metals vs. South Star Battery |
| Benton Resources vs. Ascendant Resources | Benton Resources vs. Cantex Mine Development | Benton Resources vs. Amarc Resources | Benton Resources vs. Sterling Metals 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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