Correlation Between CAT Strategic and Metals Creek

Can any of the company-specific risk be diversified away by investing in both CAT Strategic and Metals Creek 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 CAT Strategic and Metals Creek into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CAT Strategic Metals and Metals Creek Resources, you can compare the effects of market volatilities on CAT Strategic and Metals Creek 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 CAT Strategic with a short position of Metals Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAT Strategic and Metals Creek.

Diversification Opportunities for CAT Strategic and Metals Creek

-0.39

Correlation Coefficient

CAT Strategic  Metals Creek

Very good diversification

The 3 months correlation between CAT and Metals is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding CAT Strategic Metals and Metals Creek Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Creek Resources and CAT Strategic 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 CAT Strategic Metals are associated (or correlated) with Metals Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Creek Resources has no effect on the direction of CAT Strategic i.e., CAT Strategic and Metals Creek go up and down completely randomly.

Pair Corralation between CAT Strategic and Metals Creek

Assuming the 90 days horizon CAT Strategic Metals is expected to generate 1.59 times more return on investment than Metals Creek. However, CAT Strategic is 1.59 times more volatile than Metals Creek Resources. It trades about 0.11 of its potential returns per unit of risk. Metals Creek Resources is currently generating about 0.09 per unit of risk. If you would invest  0.80  in CAT Strategic Metals on September 13, 2024 and sell it today you would lose (0.40) from holding CAT Strategic Metals or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

CAT Strategic Metals  vs.  Metals Creek Resources

CAT Strategic Metals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CAT Strategic Metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CAT Strategic reported solid returns over the last few months and may actually be approaching a breakup point.

Metals Creek Resources

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metals Creek Resources are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Metals Creek reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CAT Strategic and Metals Creek

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

The idea behind CAT Strategic Metals and Metals Creek Resources 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.