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
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Compania and Northern is -0.21. 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 generate 0.16 times more return on investment than Northern Minerals. However, Compania de Minas is 6.41 times less risky than Northern Minerals. It trades about 0.16 of its potential returns per unit of risk. Northern Minerals Exploration is currently generating about -0.04 per unit of risk. If you would invest 1,210 in Compania de Minas on November 3, 2024 and sell it today you would earn a total of 66.00 from holding Compania de Minas or generate 5.45% return on investment 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. McEwen Mining | Compania vs. Hecla Mining |
| Northern Minerals vs. American Copper Development | Northern Minerals vs. Triple Flag Precious | Northern Minerals vs. Hecla Mining | Northern Minerals vs. Compania de Minas |
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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