Correlation Between Compania and Northern Minerals
Can any of the company-specific risk be diversified away by investing in both Compania and Northern 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 Compania and Northern Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compania de Minas and Northern Minerals Exploration, you can compare the effects of market volatilities on Compania and Northern 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 Compania with a short position of Northern Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Northern Minerals.
Diversification Opportunities for Compania and Northern Minerals
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Compania and Northern is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Minas and Northern Minerals Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Minerals and Compania 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 Compania de Minas are associated (or correlated) with Northern Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Minerals has no effect on the direction of Compania i.e., Compania and Northern Minerals go up and down completely randomly.
Pair Corralation between Compania and Northern Minerals
Considering the 90-day investment horizon Compania de Minas is expected to under-perform the Northern Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Compania de Minas is 16.56 times less risky than Northern Minerals. The stock trades about -0.2 of its potential returns per unit of risk. The Northern Minerals Exploration is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Northern Minerals Exploration on August 28, 2024 and sell it today you would lose (1.00) from holding Northern Minerals Exploration or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania de Minas vs. Northern Minerals Exploration
Performance |
| Timeline |
| Compania de Minas |
| Northern Minerals |
Compania and Northern Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania and Northern Minerals
The main advantage of trading using opposite Compania and Northern Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania position performs unexpectedly, Northern 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 Northern Minerals will offset losses from the drop in Northern Minerals' long position.| Compania vs. Gold Royalty Corp | Compania vs. SilverCrest Metals | Compania vs. Hecla Mining | Compania vs. Avino Silver Gold |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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