Correlation Between Flying Nickel and Core Assets

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Can any of the company-specific risk be diversified away by investing in both Flying Nickel and Core Assets 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 Core Assets 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 Core Assets Corp, you can compare the effects of market volatilities on Flying Nickel and Core Assets 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 Core Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flying Nickel and Core Assets.

Diversification Opportunities for Flying Nickel and Core Assets

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Flying and Core is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Flying Nickel Mining and Core Assets Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Assets Corp 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 Core Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Assets Corp has no effect on the direction of Flying Nickel i.e., Flying Nickel and Core Assets go up and down completely randomly.

Pair Corralation between Flying Nickel and Core Assets

Assuming the 90 days horizon Flying Nickel Mining is expected to generate 3.06 times more return on investment than Core Assets. However, Flying Nickel is 3.06 times more volatile than Core Assets Corp. It trades about 0.11 of its potential returns per unit of risk. Core Assets Corp is currently generating about -0.28 per unit of risk. If you would invest  3.32  in Flying Nickel Mining on August 28, 2024 and sell it today you would earn a total of  0.08  from holding Flying Nickel Mining or generate 2.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Flying Nickel Mining  vs.  Core Assets Corp

 Performance 
       Timeline  
Flying Nickel Mining 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Flying Nickel Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Flying Nickel reported solid returns over the last few months and may actually be approaching a breakup point.
Core Assets Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Core Assets Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Flying Nickel and Core Assets Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Flying Nickel and Core Assets

The main advantage of trading using opposite Flying Nickel and Core Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flying Nickel position performs unexpectedly, Core Assets 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 Core Assets will offset losses from the drop in Core Assets' long position.
The idea behind Flying Nickel Mining and Core Assets Corp 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.
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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