Correlation Between Compass Minerals and US GoldMining

Can any of the company-specific risk be diversified away by investing in both Compass Minerals and US GoldMining 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 Compass Minerals and US GoldMining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Compass Minerals International and US GoldMining Common, you can compare the effects of market volatilities on Compass Minerals and US GoldMining 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 Compass Minerals with a short position of US GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Minerals and US GoldMining.

Diversification Opportunities for Compass Minerals and US GoldMining

-0.56

Correlation Coefficient

Compass Minerals  US GoldMining

Excellent diversification

The 3 months correlation between Compass and USGO is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Compass Minerals International and US GoldMining Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US GoldMining Common and Compass Minerals 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 Compass Minerals International are associated (or correlated) with US GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US GoldMining Common has no effect on the direction of Compass Minerals i.e., Compass Minerals and US GoldMining go up and down completely randomly.

Pair Corralation between Compass Minerals and US GoldMining

Considering the 90-day investment horizon Compass Minerals International is expected to generate 1.11 times more return on investment than US GoldMining. However, Compass Minerals is 1.11 times more volatile than US GoldMining Common. It trades about 0.23 of its potential returns per unit of risk. US GoldMining Common is currently generating about -0.07 per unit of risk. If you would invest  1,252  in Compass Minerals International on April 25, 2025 and sell it today you would earn a total of  849.00  from holding Compass Minerals International or generate 67.81% return on investment over 90 days.

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

Compass Minerals International  vs.  US GoldMining Common

Compass Minerals Int

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Compass Minerals International are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain primary indicators, Compass Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

US GoldMining Common

Risk-Adjusted Performance

Very Weak

Over the last 90 days US GoldMining Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in August 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Compass Minerals and US GoldMining

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

The idea behind Compass Minerals International and US GoldMining Common 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.