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
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Compass and USGO is -0.54. 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 0.17 of its potential returns per unit of risk. US GoldMining Common is currently generating about -0.06 per unit of risk. If you would invest 1,371 in Compass Minerals International on May 2, 2025 and sell it today you would earn a total of 606.00 from holding Compass Minerals International or generate 44.2% 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
Performance |
Timeline |
Compass Minerals Int |
US GoldMining Common |
Compass Minerals and US GoldMining Volatility Contrast
Predicted Return Density |
Returns |
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.Compass Minerals vs. ioneer | Compass Minerals vs. Core Lithium | Compass Minerals vs. Noram Lithium Corp | Compass Minerals vs. Alpha Lithium |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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