Correlation Between First Mining and Evolution Mining
Can any of the company-specific risk be diversified away by investing in both First Mining and Evolution Mining 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 Evolution Mining 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 Evolution Mining, you can compare the effects of market volatilities on First Mining and Evolution Mining 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 Evolution Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Mining and Evolution Mining.
Diversification Opportunities for First Mining and Evolution Mining
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and Evolution is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding First Mining Gold and Evolution Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining 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 Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of First Mining i.e., First Mining and Evolution Mining go up and down completely randomly.
Pair Corralation between First Mining and Evolution Mining
Assuming the 90 days horizon First Mining Gold is expected to under-perform the Evolution Mining. In addition to that, First Mining is 1.34 times more volatile than Evolution Mining. It trades about -0.04 of its total potential returns per unit of risk. Evolution Mining is currently generating about 0.0 per unit of volatility. If you would invest 320.00 in Evolution Mining on September 2, 2024 and sell it today you would lose (4.00) from holding Evolution Mining or give up 1.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Mining Gold vs. Evolution Mining
Performance |
| Timeline |
| First Mining Gold |
| Evolution Mining |
First Mining and Evolution Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Mining and Evolution Mining
The main advantage of trading using opposite First Mining and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Mining position performs unexpectedly, Evolution Mining 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 Evolution Mining will offset losses from the drop in Evolution Mining's long position.| First Mining vs. South32 Limited | First Mining vs. NioCorp Developments Ltd | First Mining vs. HUMANA INC | First Mining vs. SCOR PK |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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