Correlation Between Mesabi Trust and SSR Mining

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

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

Diversification Opportunities for Mesabi Trust and SSR Mining

-0.49

Correlation Coefficient

Mesabi Trust  SSR Mining

Very good diversification

The 3 months correlation between Mesabi and SSR is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Mesabi Trust and SSR Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSR Mining and Mesabi Trust 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 Mesabi Trust are associated (or correlated) with SSR Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSR Mining has no effect on the direction of Mesabi Trust i.e., Mesabi Trust and SSR Mining go up and down completely randomly.

Pair Corralation between Mesabi Trust and SSR Mining

Considering the 90-day investment horizon Mesabi Trust is expected to generate 0.53 times more return on investment than SSR Mining. However, Mesabi Trust is 1.87 times less risky than SSR Mining. It trades about 0.15 of its potential returns per unit of risk. SSR Mining is currently generating about 0.0 per unit of risk. If you would invest  1,673  in Mesabi Trust on March 9, 2024 and sell it today you would earn a total of  107.00  from holding Mesabi Trust or generate 6.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Mesabi Trust  vs.  SSR Mining

Mesabi Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mesabi Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mesabi Trust is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

SSR Mining

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SSR Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, SSR Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mesabi Trust and SSR Mining

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

The idea behind Mesabi Trust and SSR Mining 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.