Correlation Between Flying Nickel and Decade Resources
Can any of the company-specific risk be diversified away by investing in both Flying Nickel and Decade 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 Decade 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 Decade Resources, you can compare the effects of market volatilities on Flying Nickel and Decade 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 Decade Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flying Nickel and Decade Resources.
Diversification Opportunities for Flying Nickel and Decade Resources
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flying and Decade is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Flying Nickel Mining and Decade Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decade 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 Decade Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decade Resources has no effect on the direction of Flying Nickel i.e., Flying Nickel and Decade Resources go up and down completely randomly.
Pair Corralation between Flying Nickel and Decade Resources
Assuming the 90 days horizon Flying Nickel Mining is expected to generate 2.17 times more return on investment than Decade Resources. However, Flying Nickel is 2.17 times more volatile than Decade Resources. It trades about 0.11 of its potential returns per unit of risk. Decade Resources is currently generating about -0.12 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 Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flying Nickel Mining vs. Decade Resources
Performance |
| Timeline |
| Flying Nickel Mining |
| Decade Resources |
Flying Nickel and Decade Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flying Nickel and Decade Resources
The main advantage of trading using opposite Flying Nickel and Decade Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flying Nickel position performs unexpectedly, Decade 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 Decade Resources will offset losses from the drop in Decade Resources' long position.The idea behind Flying Nickel Mining and Decade Resources 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.| Decade Resources vs. First American Silver | Decade Resources vs. Australian Vanadium Limited | Decade Resources vs. International Lithium Corp | Decade Resources vs. Wealth Minerals |
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 Stocks Directory module to find actively traded stocks across global markets.
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