Correlation Between Strickland Metals and Cooper Metals
Can any of the company-specific risk be diversified away by investing in both Strickland Metals and Cooper Metals 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 Strickland Metals and Cooper Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strickland Metals and Cooper Metals, you can compare the effects of market volatilities on Strickland Metals and Cooper Metals 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 Strickland Metals with a short position of Cooper Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strickland Metals and Cooper Metals.
Diversification Opportunities for Strickland Metals and Cooper Metals
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Strickland and Cooper is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Strickland Metals and Cooper Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cooper Metals and Strickland 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 Strickland Metals are associated (or correlated) with Cooper Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cooper Metals has no effect on the direction of Strickland Metals i.e., Strickland Metals and Cooper Metals go up and down completely randomly.
Pair Corralation between Strickland Metals and Cooper Metals
Assuming the 90 days trading horizon Strickland Metals is expected to generate 0.95 times more return on investment than Cooper Metals. However, Strickland Metals is 1.05 times less risky than Cooper Metals. It trades about -0.02 of its potential returns per unit of risk. Cooper Metals is currently generating about -0.1 per unit of risk. If you would invest 19.00 in Strickland Metals on August 26, 2024 and sell it today you would lose (11.10) from holding Strickland Metals or give up 58.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strickland Metals vs. Cooper Metals
Performance |
| Timeline |
| Strickland Metals |
| Cooper Metals |
Strickland Metals and Cooper Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strickland Metals and Cooper Metals
The main advantage of trading using opposite Strickland Metals and Cooper Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strickland Metals position performs unexpectedly, Cooper Metals 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 Cooper Metals will offset losses from the drop in Cooper Metals' long position.| Strickland Metals vs. Northern Star Resources | Strickland Metals vs. Evolution Mining | Strickland Metals vs. Bluescope Steel | Strickland Metals vs. Sandfire Resources NL |
| Cooper Metals vs. Stelar Metals | Cooper Metals vs. DY6 Metals | Cooper Metals vs. Dicker Data | Cooper Metals vs. Strickland Metals |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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