Correlation Between Iconic Minerals and Critical Elements

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

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

Diversification Opportunities for Iconic Minerals and Critical Elements

-0.35

Correlation Coefficient

Iconic Minerals  Critical Elements

Very good diversification

The 3 months correlation between Iconic and Critical is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Iconic Minerals and Critical Elements in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Elements and Iconic 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 Iconic Minerals are associated (or correlated) with Critical Elements. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Elements has no effect on the direction of Iconic Minerals i.e., Iconic Minerals and Critical Elements go up and down completely randomly.

Pair Corralation between Iconic Minerals and Critical Elements

Assuming the 90 days horizon Iconic Minerals is expected to generate 5.33 times more return on investment than Critical Elements. However, Iconic Minerals is 5.33 times more volatile than Critical Elements. It trades about 0.06 of its potential returns per unit of risk. Critical Elements is currently generating about 0.04 per unit of risk. If you would invest  2.00  in Iconic Minerals on September 3, 2024 and sell it today you would lose (1.00) from holding Iconic Minerals or give up 50.0% of portfolio value over 90 days.

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

Iconic Minerals  vs.  Critical Elements

Iconic Minerals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Iconic Minerals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Iconic Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Critical Elements

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Critical Elements are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Critical Elements may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Iconic Minerals and Critical Elements

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

The idea behind Iconic Minerals and Critical Elements 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 Stocks Directory module to find actively traded stocks across global markets.