Correlation Between Sterling Metals and American CuMo
Can any of the company-specific risk be diversified away by investing in both Sterling Metals and American CuMo 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 American CuMo 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 American CuMo Mining, you can compare the effects of market volatilities on Sterling Metals and American CuMo 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 American CuMo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Metals and American CuMo.
Diversification Opportunities for Sterling Metals and American CuMo
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sterling and American is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Metals Corp and American CuMo Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American CuMo Mining 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 American CuMo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American CuMo Mining has no effect on the direction of Sterling Metals i.e., Sterling Metals and American CuMo go up and down completely randomly.
Pair Corralation between Sterling Metals and American CuMo
Assuming the 90 days horizon Sterling Metals Corp is expected to generate 0.41 times more return on investment than American CuMo. However, Sterling Metals Corp is 2.44 times less risky than American CuMo. It trades about -0.1 of its potential returns per unit of risk. American CuMo Mining is currently generating about -0.22 per unit of risk. If you would invest 3.56 in Sterling Metals Corp on August 29, 2024 and sell it today you would lose (0.59) from holding Sterling Metals Corp or give up 16.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Sterling Metals Corp vs. American CuMo Mining
Performance |
| Timeline |
| Sterling Metals Corp |
| American CuMo Mining |
Sterling Metals and American CuMo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Metals and American CuMo
The main advantage of trading using opposite Sterling Metals and American CuMo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Metals position performs unexpectedly, American CuMo 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 American CuMo will offset losses from the drop in American CuMo'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 |
| American CuMo vs. Pasinex Resources Limited | American CuMo vs. Themac Resources Group | American CuMo vs. East Africa Metals | American CuMo vs. Forsys 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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