Correlation Between Arbor Metals and Nicola Mining
Can any of the company-specific risk be diversified away by investing in both Arbor Metals and Nicola 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 Arbor Metals and Nicola Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arbor Metals Corp and Nicola Mining, you can compare the effects of market volatilities on Arbor Metals and Nicola 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 Arbor Metals with a short position of Nicola Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Metals and Nicola Mining.
Diversification Opportunities for Arbor Metals and Nicola Mining
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arbor and Nicola is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Metals Corp and Nicola Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicola Mining and Arbor 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 Arbor Metals Corp are associated (or correlated) with Nicola Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicola Mining has no effect on the direction of Arbor Metals i.e., Arbor Metals and Nicola Mining go up and down completely randomly.
Pair Corralation between Arbor Metals and Nicola Mining
Assuming the 90 days horizon Arbor Metals Corp is expected to under-perform the Nicola Mining. In addition to that, Arbor Metals is 1.08 times more volatile than Nicola Mining. It trades about -0.17 of its total potential returns per unit of risk. Nicola Mining is currently generating about -0.08 per unit of volatility. If you would invest 30.00 in Nicola Mining on August 29, 2024 and sell it today you would lose (2.00) from holding Nicola Mining or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arbor Metals Corp vs. Nicola Mining
Performance |
| Timeline |
| Arbor Metals Corp |
| Nicola Mining |
Arbor Metals and Nicola Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbor Metals and Nicola Mining
The main advantage of trading using opposite Arbor Metals and Nicola Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Metals position performs unexpectedly, Nicola 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 Nicola Mining will offset losses from the drop in Nicola Mining's long position.| Arbor Metals vs. First Majestic Silver | Arbor Metals vs. Ivanhoe Energy | Arbor Metals vs. Orezone Gold Corp | Arbor Metals vs. Faraday Copper Corp |
| Nicola Mining vs. First Majestic Silver | Nicola Mining vs. Ivanhoe Energy | Nicola Mining vs. Orezone Gold Corp | Nicola Mining vs. Faraday Copper Corp |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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