Correlation Between Clean Air and Stillwater Critical

Can any of the company-specific risk be diversified away by investing in both Clean Air and Stillwater Critical 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 Clean Air and Stillwater Critical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Clean Air Metals and Stillwater Critical Minerals, you can compare the effects of market volatilities on Clean Air and Stillwater Critical 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 Clean Air with a short position of Stillwater Critical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Air and Stillwater Critical.

Diversification Opportunities for Clean Air and Stillwater Critical

0.45

Correlation Coefficient

Clean Air  Stillwater Critical

Very weak diversification

The 3 months correlation between Clean and Stillwater is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Clean Air Metals and Stillwater Critical Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stillwater Critical and Clean Air 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 Clean Air Metals are associated (or correlated) with Stillwater Critical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stillwater Critical has no effect on the direction of Clean Air i.e., Clean Air and Stillwater Critical go up and down completely randomly.

Pair Corralation between Clean Air and Stillwater Critical

Assuming the 90 days horizon Clean Air Metals is expected to under-perform the Stillwater Critical. But the stock apears to be less risky and, when comparing its historical volatility, Clean Air Metals is 1.04 times less risky than Stillwater Critical. The stock trades about -0.04 of its potential returns per unit of risk. The Stillwater Critical Minerals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Stillwater Critical Minerals on September 22, 2024 and sell it today you would lose (1.00) from holding Stillwater Critical Minerals or give up 8.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Clean Air Metals  vs.  Stillwater Critical Minerals

Clean Air Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Air Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Stillwater Critical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stillwater Critical Minerals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Stillwater Critical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Clean Air and Stillwater Critical

The main advantage of trading using opposite Clean Air and Stillwater Critical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Air position performs unexpectedly, Stillwater Critical 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 Stillwater Critical will offset losses from the drop in Stillwater Critical's long position.

The idea behind Clean Air Metals and Stillwater Critical Minerals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.