Correlation Between Cleveland Cliffs and Centerra Gold

Can any of the company-specific risk be diversified away by investing in both Cleveland Cliffs and Centerra Gold 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 Cleveland Cliffs and Centerra Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Cleveland Cliffs and Centerra Gold

-0.77

Correlation Coefficient

Cleveland Cliffs  Centerra Gold

Pay attention - limited upside

The 3 months correlation between Cleveland and Centerra is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cleveland Cliffs and Centerra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centerra Gold and Cleveland Cliffs 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 Cleveland Cliffs are associated (or correlated) with Centerra Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centerra Gold has no effect on the direction of Cleveland Cliffs i.e., Cleveland Cliffs and Centerra Gold go up and down completely randomly.

Pair Corralation between Cleveland Cliffs and Centerra Gold

Considering the 90-day investment horizon Cleveland Cliffs is expected to under-perform the Centerra Gold. But the stock apears to be less risky and, when comparing its historical volatility, Cleveland Cliffs is 1.3 times less risky than Centerra Gold. The stock trades about -0.23 of its potential returns per unit of risk. The Centerra Gold is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  693.00  in Centerra Gold on March 31, 2024 and sell it today you would lose (21.00) from holding Centerra Gold or give up 3.03% of portfolio value over 90 days.

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

Cleveland Cliffs  vs.  Centerra Gold

Cleveland Cliffs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cleveland Cliffs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Centerra Gold

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centerra Gold are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Centerra Gold unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cleveland Cliffs and Centerra Gold

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

The idea behind Cleveland Cliffs and Centerra Gold 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 Commodity Directory module to find actively traded commodities issued by global exchanges.