Correlation Between Metals Acquisition and Bluescape Opportunities

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

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

Diversification Opportunities for Metals Acquisition and Bluescape Opportunities

0.35

Correlation Coefficient

Metals Acquisition  Bluescape Opportunities

Weak diversification

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

Pair Corralation between Metals Acquisition and Bluescape Opportunities

If you would invest  1,145  in Metals Acquisition Limited on September 17, 2024 and sell it today you would earn a total of  42.50  from holding Metals Acquisition Limited or generate 3.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.54%
Values	Daily Returns

Metals Acquisition Limited  vs.  Bluescape Opportunities Acquis

Metals Acquisition

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metals Acquisition Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Metals Acquisition is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Bluescape Opportunities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bluescape Opportunities Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Bluescape Opportunities is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Metals Acquisition and Bluescape Opportunities

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

The idea behind Metals Acquisition Limited and Bluescape Opportunities Acquisition 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.