Correlation Between Rover Metals and Matador Mining

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

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

Diversification Opportunities for Rover Metals and Matador Mining

-0.32

Correlation Coefficient

Rover Metals  Matador Mining

Very good diversification

The 3 months correlation between Rover and Matador is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Rover Metals Corp and Matador Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matador Mining and Rover Metals 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 Rover Metals Corp are associated (or correlated) with Matador Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matador Mining has no effect on the direction of Rover Metals i.e., Rover Metals and Matador Mining go up and down completely randomly.

Pair Corralation between Rover Metals and Matador Mining

If you would invest  1.50  in Rover Metals Corp on September 12, 2024 and sell it today you would lose (0.33) from holding Rover Metals Corp or give up 22.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Rover Metals Corp  vs.  Matador Mining Limited

Rover Metals Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rover Metals Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Rover Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Matador Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matador Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Matador Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Rover Metals and Matador Mining

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

The idea behind Rover Metals Corp and Matador Mining 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.