Correlation Between Federal National and Canada Nickel
Can any of the company-specific risk be diversified away by investing in both Federal National and Canada Nickel 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 Federal National and Canada Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal National Mortgage and Canada Nickel, you can compare the effects of market volatilities on Federal National and Canada Nickel 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 Federal National with a short position of Canada Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal National and Canada Nickel.
Diversification Opportunities for Federal National and Canada Nickel
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Federal and Canada is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and Canada Nickel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Nickel and Federal National 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 Federal National Mortgage are associated (or correlated) with Canada Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Nickel has no effect on the direction of Federal National i.e., Federal National and Canada Nickel go up and down completely randomly.
Pair Corralation between Federal National and Canada Nickel
Assuming the 90 days horizon Federal National Mortgage is expected to generate 6.68 times more return on investment than Canada Nickel. However, Federal National is 6.68 times more volatile than Canada Nickel. It trades about 0.17 of its potential returns per unit of risk. Canada Nickel is currently generating about -0.18 per unit of risk. If you would invest 1,075,000 in Federal National Mortgage on August 25, 2024 and sell it today you would earn a total of 1,455,000 from holding Federal National Mortgage or generate 135.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal National Mortgage vs. Canada Nickel
Performance |
| Timeline |
| Federal National Mortgage |
| Canada Nickel |
Federal National and Canada Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal National and Canada Nickel
The main advantage of trading using opposite Federal National and Canada Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal National position performs unexpectedly, Canada Nickel 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 Canada Nickel will offset losses from the drop in Canada Nickel's long position.| Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan |
| Canada Nickel vs. Nobel Resources Corp | Canada Nickel vs. Juggernaut Exploration | Canada Nickel vs. SPC Nickel Corp | Canada Nickel vs. Lotus Resources Limited |
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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