Correlation Between North Peak and Tectonic Metals
Can any of the company-specific risk be diversified away by investing in both North Peak and Tectonic 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 North Peak and Tectonic Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Peak Resources and Tectonic Metals, you can compare the effects of market volatilities on North Peak and Tectonic 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 North Peak with a short position of Tectonic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Peak and Tectonic Metals.
Diversification Opportunities for North Peak and Tectonic Metals
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between North and Tectonic is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding North Peak Resources and Tectonic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tectonic Metals and North Peak 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 North Peak Resources are associated (or correlated) with Tectonic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tectonic Metals has no effect on the direction of North Peak i.e., North Peak and Tectonic Metals go up and down completely randomly.
Pair Corralation between North Peak and Tectonic Metals
Assuming the 90 days horizon North Peak Resources is expected to under-perform the Tectonic Metals. But the pink sheet apears to be less risky and, when comparing its historical volatility, North Peak Resources is 1.42 times less risky than Tectonic Metals. The pink sheet trades about -0.19 of its potential returns per unit of risk. The Tectonic Metals is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 3.23 in Tectonic Metals on November 27, 2024 and sell it today you would earn a total of 0.62 from holding Tectonic Metals or generate 19.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
North Peak Resources vs. Tectonic Metals
Performance |
| Timeline |
| North Peak Resources |
| Tectonic Metals |
North Peak and Tectonic Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Peak and Tectonic Metals
The main advantage of trading using opposite North Peak and Tectonic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Peak position performs unexpectedly, Tectonic 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 Tectonic Metals will offset losses from the drop in Tectonic Metals' long position.| North Peak vs. Lavras Gold Corp | North Peak vs. TRU Precious Metals | North Peak vs. Orefinders Resources | North Peak vs. Nine Mile Metals |
| Tectonic Metals vs. Red Pine Exploration | Tectonic Metals vs. Grande Portage Resources | Tectonic Metals vs. Puma Exploration | Tectonic Metals vs. Aurion Resources |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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