Correlation Between Metals Creek and CAT Strategic

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

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

Diversification Opportunities for Metals Creek and CAT Strategic

-0.39

Correlation Coefficient

Metals Creek  CAT Strategic

Very good diversification

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

Pair Corralation between Metals Creek and CAT Strategic

Assuming the 90 days horizon Metals Creek is expected to generate 1.95 times less return on investment than CAT Strategic. But when comparing it to its historical volatility, Metals Creek Resources is 1.59 times less risky than CAT Strategic. It trades about 0.09 of its potential returns per unit of risk. CAT Strategic Metals is currently generating about 0.11 of returns per unit of risk over similar time horizon. 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

Metals Creek Resources  vs.  CAT Strategic Metals

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.

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.

Pair Trading with Metals Creek and CAT Strategic

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

The idea behind Metals Creek Resources and CAT Strategic Metals 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.