Correlation Between BHP Group and Niobay Metals
Can any of the company-specific risk be diversified away by investing in both BHP Group and Niobay Metals 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 BHP Group and Niobay Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHP Group Limited and Niobay Metals, you can compare the effects of market volatilities on BHP Group and Niobay Metals 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 BHP Group with a short position of Niobay Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Niobay Metals.
Diversification Opportunities for BHP Group and Niobay Metals
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BHP and Niobay is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Niobay Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niobay Metals and BHP Group 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 BHP Group Limited are associated (or correlated) with Niobay Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niobay Metals has no effect on the direction of BHP Group i.e., BHP Group and Niobay Metals go up and down completely randomly.
Pair Corralation between BHP Group and Niobay Metals
Assuming the 90 days horizon BHP Group is expected to generate 8.89 times less return on investment than Niobay Metals. But when comparing it to its historical volatility, BHP Group Limited is 3.64 times less risky than Niobay Metals. It trades about 0.02 of its potential returns per unit of risk. Niobay Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7.00 in Niobay Metals on August 28, 2024 and sell it today you would lose (3.00) from holding Niobay Metals or give up 42.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Niobay Metals
Performance |
| Timeline |
| BHP Group Limited |
| Niobay Metals |
BHP Group and Niobay Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Niobay Metals
The main advantage of trading using opposite BHP Group and Niobay Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Niobay Metals 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 Niobay Metals will offset losses from the drop in Niobay Metals' long position.| BHP Group vs. Anglo American PLC | BHP Group vs. Avarone Metals | BHP Group vs. Huntsman Exploration | BHP Group vs. Aurelia Metals Limited |
| Niobay Metals vs. Murchison Minerals | Niobay Metals vs. Mundoro Capital | Niobay Metals vs. E79 Resources Corp | Niobay Metals vs. Norra Metals 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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