Correlation Between Minera Frisco and Cleveland Cliffs

Can any of the company-specific risk be diversified away by investing in both Minera Frisco and Cleveland Cliffs 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 Minera Frisco and Cleveland Cliffs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Minera Frisco SAB and Cleveland Cliffs, you can compare the effects of market volatilities on Minera Frisco and Cleveland Cliffs 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 Minera Frisco with a short position of Cleveland Cliffs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minera Frisco and Cleveland Cliffs.

Diversification Opportunities for Minera Frisco and Cleveland Cliffs

0.63

Correlation Coefficient

Minera Frisco  Cleveland Cliffs

Poor diversification

The 3 months correlation between Minera and Cleveland is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Minera Frisco SAB and Cleveland Cliffs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleveland Cliffs and Minera Frisco 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 Minera Frisco SAB are associated (or correlated) with Cleveland Cliffs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleveland Cliffs has no effect on the direction of Minera Frisco i.e., Minera Frisco and Cleveland Cliffs go up and down completely randomly.

Pair Corralation between Minera Frisco and Cleveland Cliffs

Assuming the 90 days trading horizon Minera Frisco SAB is expected to generate 0.72 times more return on investment than Cleveland Cliffs. However, Minera Frisco SAB is 1.38 times less risky than Cleveland Cliffs. It trades about 0.03 of its potential returns per unit of risk. Cleveland Cliffs is currently generating about -0.04 per unit of risk. If you would invest  345.00  in Minera Frisco SAB on September 26, 2024 and sell it today you would earn a total of  12.00  from holding Minera Frisco SAB or generate 3.48% return on investment over 90 days.

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

Minera Frisco SAB  vs.  Cleveland Cliffs

Minera Frisco SAB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Minera Frisco SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Minera Frisco may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cleveland Cliffs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cleveland Cliffs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Minera Frisco and Cleveland Cliffs

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

The idea behind Minera Frisco SAB and Cleveland Cliffs 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.