Correlation Between Compass Minerals and Silver Bull

Can any of the company-specific risk be diversified away by investing in both Compass Minerals and Silver Bull 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 Compass Minerals and Silver Bull into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Compass Minerals International and Silver Bull Resources, you can compare the effects of market volatilities on Compass Minerals and Silver Bull 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 Compass Minerals with a short position of Silver Bull. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Minerals and Silver Bull.

Diversification Opportunities for Compass Minerals and Silver Bull

-0.77

Correlation Coefficient

Compass Minerals  Silver Bull

Pay attention - limited upside

The 3 months correlation between Compass and Silver is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Compass Minerals International and Silver Bull Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Bull Resources and Compass Minerals 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 Compass Minerals International are associated (or correlated) with Silver Bull. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Bull Resources has no effect on the direction of Compass Minerals i.e., Compass Minerals and Silver Bull go up and down completely randomly.

Pair Corralation between Compass Minerals and Silver Bull

If you would invest  846.00  in Compass Minerals International on September 12, 2024 and sell it today you would earn a total of  519.00  from holding Compass Minerals International or generate 61.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Compass Minerals International  vs.  Silver Bull Resources

Compass Minerals Int

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compass Minerals International are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady primary indicators, Compass Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Silver Bull Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silver Bull Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Silver Bull is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Compass Minerals and Silver Bull

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

The idea behind Compass Minerals International and Silver Bull 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.