Correlation Between Almaden Minerals and FMC

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

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

Diversification Opportunities for Almaden Minerals and FMC

0.02

Correlation Coefficient

Almaden Minerals  FMC

Significant diversification

The 3 months correlation between Almaden and FMC is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Almaden Minerals and FMC Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FMC Corporation and Almaden 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 Almaden Minerals are associated (or correlated) with FMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FMC Corporation has no effect on the direction of Almaden Minerals i.e., Almaden Minerals and FMC go up and down completely randomly.

Pair Corralation between Almaden Minerals and FMC

Considering the 90-day investment horizon Almaden Minerals is expected to under-perform the FMC. In addition to that, Almaden Minerals is 12.51 times more volatile than FMC Corporation. It trades about -0.31 of its total potential returns per unit of risk. FMC Corporation is currently generating about -0.09 per unit of volatility. If you would invest  6,186  in FMC Corporation on January 26, 2024 and sell it today you would lose (346.00) from holding FMC Corporation or give up 5.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	42.86%
Values	Daily Returns

Almaden Minerals  vs.  FMC Corp.

Almaden Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Almaden Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

FMC Corporation

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FMC Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, FMC is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Almaden Minerals and FMC

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

The idea behind Almaden Minerals and FMC Corporation 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.