Correlation Between International Business and Northern Minerals
Can any of the company-specific risk be diversified away by investing in both International Business and Northern Minerals 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 International Business and Northern Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and Northern Minerals Exploration, you can compare the effects of market volatilities on International Business and Northern Minerals 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 International Business with a short position of Northern Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Northern Minerals.
Diversification Opportunities for International Business and Northern Minerals
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Northern is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Northern Minerals Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Minerals and International Business 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 International Business Machines are associated (or correlated) with Northern Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Minerals has no effect on the direction of International Business i.e., International Business and Northern Minerals go up and down completely randomly.
Pair Corralation between International Business and Northern Minerals
Considering the 90-day investment horizon International Business is expected to generate 13.52 times less return on investment than Northern Minerals. But when comparing it to its historical volatility, International Business Machines is 16.93 times less risky than Northern Minerals. It trades about 0.13 of its potential returns per unit of risk. Northern Minerals Exploration is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 7.00 in Northern Minerals Exploration on August 31, 2024 and sell it today you would earn a total of 11.00 from holding Northern Minerals Exploration or generate 157.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. Northern Minerals Exploration
Performance |
| Timeline |
| International Business |
| Northern Minerals |
International Business and Northern Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and Northern Minerals
The main advantage of trading using opposite International Business and Northern Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Northern Minerals 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 Northern Minerals will offset losses from the drop in Northern Minerals' long position.| International Business vs. RLJ Lodging Trust | International Business vs. Aquagold International | International Business vs. Stepstone Group | International Business vs. Morningstar Unconstrained Allocation |
| Northern Minerals vs. American Copper Development | Northern Minerals vs. Triple Flag Precious | Northern Minerals vs. Hecla Mining | Northern Minerals vs. Compania de Minas |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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