Correlation Between First Mining and Metalla Royalty
Can any of the company-specific risk be diversified away by investing in both First Mining and Metalla Royalty 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 First Mining and Metalla Royalty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Mining Gold and Metalla Royalty Streaming, you can compare the effects of market volatilities on First Mining and Metalla Royalty 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 First Mining with a short position of Metalla Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Mining and Metalla Royalty.
Diversification Opportunities for First Mining and Metalla Royalty
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Metalla is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding First Mining Gold and Metalla Royalty Streaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalla Royalty Streaming and First Mining 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 First Mining Gold are associated (or correlated) with Metalla Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalla Royalty Streaming has no effect on the direction of First Mining i.e., First Mining and Metalla Royalty go up and down completely randomly.
Pair Corralation between First Mining and Metalla Royalty
Assuming the 90 days horizon First Mining Gold is expected to generate 1.58 times more return on investment than Metalla Royalty. However, First Mining is 1.58 times more volatile than Metalla Royalty Streaming. It trades about -0.14 of its potential returns per unit of risk. Metalla Royalty Streaming is currently generating about -0.23 per unit of risk. If you would invest 16.00 in First Mining Gold on August 30, 2024 and sell it today you would lose (3.00) from holding First Mining Gold or give up 18.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Mining Gold vs. Metalla Royalty Streaming
Performance |
| Timeline |
| First Mining Gold |
| Metalla Royalty Streaming |
First Mining and Metalla Royalty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Mining and Metalla Royalty
The main advantage of trading using opposite First Mining and Metalla Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Mining position performs unexpectedly, Metalla Royalty 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 Metalla Royalty will offset losses from the drop in Metalla Royalty's long position.| First Mining vs. Arizona Sonoran Copper | First Mining vs. Filo Mining Corp | First Mining vs. Marimaca Copper Corp | First Mining vs. iShares Canadian HYBrid |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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