Correlation Between BTU Metals and Norsemont Mining
Can any of the company-specific risk be diversified away by investing in both BTU Metals and Norsemont 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 BTU Metals and Norsemont Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTU Metals Corp and Norsemont Mining, you can compare the effects of market volatilities on BTU Metals and Norsemont 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 BTU Metals with a short position of Norsemont Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTU Metals and Norsemont Mining.
Diversification Opportunities for BTU Metals and Norsemont Mining
-0.96 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BTU and Norsemont is -0.96. Overlapping area represents the amount of risk that can be diversified away by holding BTU Metals Corp and Norsemont Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norsemont Mining and BTU 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 BTU Metals Corp are associated (or correlated) with Norsemont Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norsemont Mining has no effect on the direction of BTU Metals i.e., BTU Metals and Norsemont Mining go up and down completely randomly.
Pair Corralation between BTU Metals and Norsemont Mining
Assuming the 90 days horizon BTU Metals Corp is expected to generate 0.29 times more return on investment than Norsemont Mining. However, BTU Metals Corp is 3.44 times less risky than Norsemont Mining. It trades about 0.21 of its potential returns per unit of risk. Norsemont Mining is currently generating about -0.14 per unit of risk. If you would invest 1.91 in BTU Metals Corp on August 25, 2024 and sell it today you would earn a total of 0.14 from holding BTU Metals Corp or generate 7.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
BTU Metals Corp vs. Norsemont Mining
Performance |
| Timeline |
| BTU Metals Corp |
| Norsemont Mining |
BTU Metals and Norsemont Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTU Metals and Norsemont Mining
The main advantage of trading using opposite BTU Metals and Norsemont Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTU Metals position performs unexpectedly, Norsemont 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 Norsemont Mining will offset losses from the drop in Norsemont Mining's long position.| BTU Metals vs. Aurion Resources | BTU Metals vs. Liberty Gold Corp | BTU Metals vs. Rio2 Limited | BTU Metals vs. Orezone Gold Corp |
| Norsemont Mining vs. Aurion Resources | Norsemont Mining vs. Liberty Gold Corp | Norsemont Mining vs. Rio2 Limited | Norsemont Mining vs. Orezone Gold 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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