Correlation Between Boot Barn and Critical Metals

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

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

Diversification Opportunities for Boot Barn and Critical Metals

0.5

Correlation Coefficient

Boot Barn  Critical Metals

Very weak diversification

The 3 months correlation between Boot and Critical is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Boot Barn Holdings and Critical Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Metals Corp and Boot Barn 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 Boot Barn Holdings are associated (or correlated) with Critical Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Metals Corp has no effect on the direction of Boot Barn i.e., Boot Barn and Critical Metals go up and down completely randomly.

Pair Corralation between Boot Barn and Critical Metals

Given the investment horizon of 90 days Boot Barn is expected to generate 5.94 times less return on investment than Critical Metals. But when comparing it to its historical volatility, Boot Barn Holdings is 3.89 times less risky than Critical Metals. It trades about 0.13 of its potential returns per unit of risk. Critical Metals Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  157.00  in Critical Metals Corp on May 12, 2025 and sell it today you would earn a total of  306.00  from holding Critical Metals Corp or generate 194.9% return on investment over 90 days.

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

Boot Barn Holdings  vs.  Critical Metals Corp

Boot Barn Holdings

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Boot Barn Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Boot Barn unveiled solid returns over the last few months and may actually be approaching a breakup point.

Critical Metals Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Critical Metals Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile primary indicators, Critical Metals disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boot Barn and Critical Metals

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

The idea behind Boot Barn Holdings and Critical Metals Corp 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.