Correlation Between Power Metals and Compass Minerals

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

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

Diversification Opportunities for Power Metals and Compass Minerals

-0.26

Correlation Coefficient

Power Metals  Compass Minerals

Very good diversification

The 3 months correlation between Power and Compass is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Power Metals Corp and Compass Minerals International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Minerals Int and Power Metals 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 Power Metals Corp are associated (or correlated) with Compass Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Minerals Int has no effect on the direction of Power Metals i.e., Power Metals and Compass Minerals go up and down completely randomly.

Pair Corralation between Power Metals and Compass Minerals

Assuming the 90 days horizon Power Metals Corp is expected to generate 2.34 times more return on investment than Compass Minerals. However, Power Metals is 2.34 times more volatile than Compass Minerals International. It trades about 0.06 of its potential returns per unit of risk. Compass Minerals International is currently generating about -0.09 per unit of risk. If you would invest  63.00  in Power Metals Corp on August 23, 2025 and sell it today you would earn a total of  9.00  from holding Power Metals Corp or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Power Metals Corp  vs.  Compass Minerals International

Power Metals Corp

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Power Metals Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Power Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Compass Minerals Int

Risk-Adjusted Performance

Weakest

Over the last 90 days Compass Minerals International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in December 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Power Metals and Compass Minerals

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

The idea behind Power Metals Corp and Compass Minerals International 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..