Correlation Between Sterling Metals and Sherritt International
Can any of the company-specific risk be diversified away by investing in both Sterling Metals and Sherritt International 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 Sherritt International 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 Sherritt International, you can compare the effects of market volatilities on Sterling Metals and Sherritt International 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 Sherritt International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Metals and Sherritt International.
Diversification Opportunities for Sterling Metals and Sherritt International
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sterling and Sherritt is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Metals Corp and Sherritt International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherritt International 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 Sherritt International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sherritt International has no effect on the direction of Sterling Metals i.e., Sterling Metals and Sherritt International go up and down completely randomly.
Pair Corralation between Sterling Metals and Sherritt International
Assuming the 90 days horizon Sterling Metals Corp is expected to under-perform the Sherritt International. But the otc stock apears to be less risky and, when comparing its historical volatility, Sterling Metals Corp is 1.62 times less risky than Sherritt International. The otc stock trades about -0.06 of its potential returns per unit of risk. The Sherritt International is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Sherritt International on August 30, 2024 and sell it today you would lose (3.00) from holding Sherritt International or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Metals Corp vs. Sherritt International
Performance |
| Timeline |
| Sterling Metals Corp |
| Sherritt International |
Sterling Metals and Sherritt International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Metals and Sherritt International
The main advantage of trading using opposite Sterling Metals and Sherritt International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Metals position performs unexpectedly, Sherritt International 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 Sherritt International will offset losses from the drop in Sherritt International'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 |
| Sherritt International vs. Metals X Limited | Sherritt International vs. Interra Copper Corp | Sherritt International vs. Anglo American PLC | Sherritt International vs. OM Holdings Limited |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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