Correlation Between Sterling Metals and Cypress Development
Can any of the company-specific risk be diversified away by investing in both Sterling Metals and Cypress Development 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 Cypress Development 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 Cypress Development Corp, you can compare the effects of market volatilities on Sterling Metals and Cypress Development 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 Cypress Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Metals and Cypress Development.
Diversification Opportunities for Sterling Metals and Cypress Development
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sterling and Cypress is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Metals Corp and Cypress Development Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cypress Development Corp 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 Cypress Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cypress Development Corp has no effect on the direction of Sterling Metals i.e., Sterling Metals and Cypress Development go up and down completely randomly.
Pair Corralation between Sterling Metals and Cypress Development
Assuming the 90 days horizon Sterling Metals Corp is expected to generate 2.55 times more return on investment than Cypress Development. However, Sterling Metals is 2.55 times more volatile than Cypress Development Corp. It trades about 0.02 of its potential returns per unit of risk. Cypress Development Corp is currently generating about -0.03 per unit of risk. If you would invest 17.00 in Sterling Metals Corp on August 30, 2024 and sell it today you would lose (14.58) from holding Sterling Metals Corp or give up 85.76% 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. Cypress Development Corp
Performance |
| Timeline |
| Sterling Metals Corp |
| Cypress Development Corp |
Sterling Metals and Cypress Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Metals and Cypress Development
The main advantage of trading using opposite Sterling Metals and Cypress Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Metals position performs unexpectedly, Cypress Development 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 Cypress Development will offset losses from the drop in Cypress Development's long position.| Sterling Metals vs. Rockridge Resources | Sterling Metals vs. Ameriwest Lithium | Sterling Metals vs. Osisko Metals Incorporated | Sterling Metals vs. Volt Lithium Corp |
| Cypress Development vs. Core Lithium | Cypress Development vs. Lake Resources NL | Cypress Development vs. Jourdan Resources | Cypress Development vs. First American Silver |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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