Correlation Between Sterling Metals and First Mining
Can any of the company-specific risk be diversified away by investing in both Sterling Metals and First Mining 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 First Mining 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 First Mining Gold, you can compare the effects of market volatilities on Sterling Metals and First Mining 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 First Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Metals and First Mining.
Diversification Opportunities for Sterling Metals and First Mining
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sterling and First is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Metals Corp and First Mining Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mining Gold 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 First Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mining Gold has no effect on the direction of Sterling Metals i.e., Sterling Metals and First Mining go up and down completely randomly.
Pair Corralation between Sterling Metals and First Mining
Assuming the 90 days horizon Sterling Metals Corp is expected to under-perform the First Mining. In addition to that, Sterling Metals is 1.48 times more volatile than First Mining Gold. It trades about -0.22 of its total potential returns per unit of risk. First Mining Gold is currently generating about -0.14 per unit of volatility. If you would invest 11.00 in First Mining Gold on August 30, 2024 and sell it today you would lose (1.79) from holding First Mining Gold or give up 16.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Metals Corp vs. First Mining Gold
Performance |
| Timeline |
| Sterling Metals Corp |
| First Mining Gold |
Sterling Metals and First Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Metals and First Mining
The main advantage of trading using opposite Sterling Metals and First Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Metals position performs unexpectedly, First Mining 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 First Mining will offset losses from the drop in First Mining's long position.| Sterling Metals vs. Progressive Planet Solutions | Sterling Metals vs. Durango Resources | Sterling Metals vs. Avarone Metals | Sterling Metals vs. Mundoro Capital |
| First Mining vs. Aurion Resources | First Mining vs. Orezone Gold Corp | First Mining vs. Rio2 Limited | First Mining vs. Norsemont Mining |
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 Stocks Directory module to find actively traded stocks across global markets.
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