Correlation Between Flying Nickel and Bitterroot Resources
Can any of the company-specific risk be diversified away by investing in both Flying Nickel and Bitterroot 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 Flying Nickel and Bitterroot Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flying Nickel Mining and Bitterroot Resources, you can compare the effects of market volatilities on Flying Nickel and Bitterroot 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 Flying Nickel with a short position of Bitterroot Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flying Nickel and Bitterroot Resources.
Diversification Opportunities for Flying Nickel and Bitterroot Resources
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Flying and Bitterroot is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Flying Nickel Mining and Bitterroot Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitterroot Resources and Flying 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 Flying Nickel Mining are associated (or correlated) with Bitterroot Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitterroot Resources has no effect on the direction of Flying Nickel i.e., Flying Nickel and Bitterroot Resources go up and down completely randomly.
Pair Corralation between Flying Nickel and Bitterroot Resources
Assuming the 90 days horizon Flying Nickel is expected to generate 1.6 times less return on investment than Bitterroot Resources. In addition to that, Flying Nickel is 1.02 times more volatile than Bitterroot Resources. It trades about 0.04 of its total potential returns per unit of risk. Bitterroot Resources is currently generating about 0.07 per unit of volatility. If you would invest 1.84 in Bitterroot Resources on December 11, 2024 and sell it today you would earn a total of 0.56 from holding Bitterroot Resources or generate 30.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 89.35% |
| Values | Daily Returns |
Flying Nickel Mining vs. Bitterroot Resources
Performance |
| Timeline |
| Flying Nickel Mining |
Risk-Adjusted Performance
Insignificant
Weak | Strong |
| Bitterroot Resources |
Flying Nickel and Bitterroot Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flying Nickel and Bitterroot Resources
The main advantage of trading using opposite Flying Nickel and Bitterroot Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flying Nickel position performs unexpectedly, Bitterroot 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 Bitterroot Resources will offset losses from the drop in Bitterroot Resources' long position.| Flying Nickel vs. Euro Manganese | ||
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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