Correlation Between Cartesian Growth and Metals Acquisition

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

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

Diversification Opportunities for Cartesian Growth and Metals Acquisition

0.04

Correlation Coefficient

Cartesian Growth  Metals Acquisition

Significant diversification

The 3 months correlation between Cartesian and Metals is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cartesian Growth and Metals Acquisition Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Acquisition and Cartesian Growth 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 Cartesian Growth are associated (or correlated) with Metals Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Acquisition has no effect on the direction of Cartesian Growth i.e., Cartesian Growth and Metals Acquisition go up and down completely randomly.

Pair Corralation between Cartesian Growth and Metals Acquisition

Assuming the 90 days horizon Cartesian Growth is expected to generate 4.3 times less return on investment than Metals Acquisition. But when comparing it to its historical volatility, Cartesian Growth is 9.91 times less risky than Metals Acquisition. It trades about 0.12 of its potential returns per unit of risk. Metals Acquisition Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,136  in Metals Acquisition Limited on September 16, 2024 and sell it today you would earn a total of  84.00  from holding Metals Acquisition Limited or generate 7.39% return on investment over 90 days.

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

Cartesian Growth  vs.  Metals Acquisition Limited

Cartesian Growth

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cartesian Growth are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Cartesian Growth is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Metals Acquisition

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metals Acquisition Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Metals Acquisition may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cartesian Growth and Metals Acquisition

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

The idea behind Cartesian Growth and Metals Acquisition Limited 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.