Correlation Between Canada Nickel and Lotus Resources
Can any of the company-specific risk be diversified away by investing in both Canada Nickel and Lotus Resources 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 Canada Nickel and Lotus Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canada Nickel and Lotus Resources Limited, you can compare the effects of market volatilities on Canada Nickel and Lotus Resources 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 Canada Nickel with a short position of Lotus Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canada Nickel and Lotus Resources.
Diversification Opportunities for Canada Nickel and Lotus Resources
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canada and Lotus is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Canada Nickel and Lotus Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Resources and Canada Nickel 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 Canada Nickel are associated (or correlated) with Lotus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Resources has no effect on the direction of Canada Nickel i.e., Canada Nickel and Lotus Resources go up and down completely randomly.
Pair Corralation between Canada Nickel and Lotus Resources
Assuming the 90 days horizon Canada Nickel is expected to under-perform the Lotus Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Canada Nickel is 1.43 times less risky than Lotus Resources. The otc stock trades about -0.01 of its potential returns per unit of risk. The Lotus Resources Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Lotus Resources Limited on September 3, 2024 and sell it today you would earn a total of 2.00 from holding Lotus Resources Limited or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canada Nickel vs. Lotus Resources Limited
Performance |
| Timeline |
| Canada Nickel |
| Lotus Resources |
Canada Nickel and Lotus Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canada Nickel and Lotus Resources
The main advantage of trading using opposite Canada Nickel and Lotus Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canada Nickel position performs unexpectedly, Lotus Resources 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 Lotus Resources will offset losses from the drop in Lotus Resources' long position.| Canada Nickel vs. Qubec Nickel Corp | Canada Nickel vs. IGO Limited | Canada Nickel vs. Anson Resources Limited | Canada Nickel vs. Avarone Metals |
| Lotus Resources vs. Filo Mining Corp | Lotus Resources vs. Golden Goliath Resources | Lotus Resources vs. Stria Lithium | Lotus Resources vs. Monitor Ventures |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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