Correlation Between Flying Nickel and West Mining
Can any of the company-specific risk be diversified away by investing in both Flying Nickel and West 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 Flying Nickel and West Mining 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 West Mining Corp, you can compare the effects of market volatilities on Flying Nickel and West 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 Flying Nickel with a short position of West Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flying Nickel and West Mining.
Diversification Opportunities for Flying Nickel and West Mining
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Flying and West is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Flying Nickel Mining and West Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Mining 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 West Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Mining Corp has no effect on the direction of Flying Nickel i.e., Flying Nickel and West Mining go up and down completely randomly.
Pair Corralation between Flying Nickel and West Mining
Assuming the 90 days horizon Flying Nickel Mining is expected to generate 1.92 times more return on investment than West Mining. However, Flying Nickel is 1.92 times more volatile than West Mining Corp. It trades about 0.07 of its potential returns per unit of risk. West Mining Corp is currently generating about -0.02 per unit of risk. If you would invest 3.32 in Flying Nickel Mining on October 26, 2024 and sell it today you would lose (0.77) from holding Flying Nickel Mining or give up 23.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.31% |
| Values | Daily Returns |
Flying Nickel Mining vs. West Mining Corp
Performance |
| Timeline |
| Flying Nickel Mining |
| West Mining Corp |
Flying Nickel and West Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flying Nickel and West Mining
The main advantage of trading using opposite Flying Nickel and West Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flying Nickel position performs unexpectedly, West 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 West Mining will offset losses from the drop in West Mining's long position.| Flying Nickel vs. Euro Manganese | Flying Nickel vs. Lithium Australia NL | Flying Nickel vs. Bushveld Minerals Limited | Flying Nickel vs. Core Assets Corp |
| West Mining vs. Atomic Minerals | West Mining vs. Mundoro Capital | West Mining vs. E79 Resources Corp | West Mining vs. Norra Metals 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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