Correlation Between First Mining and Premium Brands
Can any of the company-specific risk be diversified away by investing in both First Mining and Premium Brands 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 Premium Brands 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 Premium Brands Holdings, you can compare the effects of market volatilities on First Mining and Premium Brands 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 Premium Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Mining and Premium Brands.
Diversification Opportunities for First Mining and Premium Brands
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Premium is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding First Mining Gold and Premium Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Brands Holdings 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 Premium Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Brands Holdings has no effect on the direction of First Mining i.e., First Mining and Premium Brands go up and down completely randomly.
Pair Corralation between First Mining and Premium Brands
Assuming the 90 days horizon First Mining Gold is expected to under-perform the Premium Brands. In addition to that, First Mining is 3.97 times more volatile than Premium Brands Holdings. It trades about -0.09 of its total potential returns per unit of risk. Premium Brands Holdings is currently generating about 0.01 per unit of volatility. If you would invest 7,998 in Premium Brands Holdings on October 9, 2024 and sell it today you would earn a total of 9.00 from holding Premium Brands Holdings or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Mining Gold vs. Premium Brands Holdings
Performance |
| Timeline |
| First Mining Gold |
| Premium Brands Holdings |
First Mining and Premium Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Mining and Premium Brands
The main advantage of trading using opposite First Mining and Premium Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Mining position performs unexpectedly, Premium Brands 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 Premium Brands will offset losses from the drop in Premium Brands' long position.The idea behind First Mining Gold and Premium Brands Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Premium Brands vs. CCL Industries | Premium Brands vs. North West | Premium Brands vs. Maple Leaf Foods | Premium Brands vs. FirstService 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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