Correlation Between MP Materials and Triple Flag

Can any of the company-specific risk be diversified away by investing in both MP Materials and Triple Flag 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 MP Materials and Triple Flag into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MP Materials Corp and Triple Flag Precious, you can compare the effects of market volatilities on MP Materials and Triple Flag 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 MP Materials with a short position of Triple Flag. Check out your portfolio center. Please also check ongoing floating volatility patterns of MP Materials and Triple Flag.

Diversification Opportunities for MP Materials and Triple Flag

0.41

Correlation Coefficient

MP Materials  Triple Flag

Very weak diversification

The 3 months correlation between MP Materials and Triple is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding MP Materials Corp and Triple Flag Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triple Flag Precious and MP Materials 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 MP Materials Corp are associated (or correlated) with Triple Flag. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triple Flag Precious has no effect on the direction of MP Materials i.e., MP Materials and Triple Flag go up and down completely randomly.

Pair Corralation between MP Materials and Triple Flag

Allowing for the 90-day total investment horizon MP Materials Corp is expected to generate 3.66 times more return on investment than Triple Flag. However, MP Materials is 3.66 times more volatile than Triple Flag Precious. It trades about 0.21 of its potential returns per unit of risk. Triple Flag Precious is currently generating about 0.06 per unit of risk. If you would invest  2,520  in MP Materials Corp on May 4, 2025 and sell it today you would earn a total of  3,849  from holding MP Materials Corp or generate 152.74% return on investment over 90 days.

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

MP Materials Corp  vs.  Triple Flag Precious

MP Materials Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MP Materials Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, MP Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Triple Flag Precious

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Triple Flag Precious are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Triple Flag may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with MP Materials and Triple Flag

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

The idea behind MP Materials Corp and Triple Flag Precious 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.