Correlation Between Kiplin Metals and Newport Exploration
Can any of the company-specific risk be diversified away by investing in both Kiplin Metals and Newport Exploration 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 Kiplin Metals and Newport Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kiplin Metals and Newport Exploration, you can compare the effects of market volatilities on Kiplin Metals and Newport Exploration 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 Kiplin Metals with a short position of Newport Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kiplin Metals and Newport Exploration.
Diversification Opportunities for Kiplin Metals and Newport Exploration
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kiplin and Newport is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Kiplin Metals and Newport Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newport Exploration and Kiplin Metals 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 Kiplin Metals are associated (or correlated) with Newport Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newport Exploration has no effect on the direction of Kiplin Metals i.e., Kiplin Metals and Newport Exploration go up and down completely randomly.
Pair Corralation between Kiplin Metals and Newport Exploration
Assuming the 90 days horizon Kiplin Metals is expected to under-perform the Newport Exploration. But the stock apears to be less risky and, when comparing its historical volatility, Kiplin Metals is 1.26 times less risky than Newport Exploration. The stock trades about -0.13 of its potential returns per unit of risk. The Newport Exploration is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Newport Exploration on September 3, 2024 and sell it today you would lose (1.00) from holding Newport Exploration or give up 11.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kiplin Metals vs. Newport Exploration
Performance |
| Timeline |
| Kiplin Metals |
| Newport Exploration |
Kiplin Metals and Newport Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kiplin Metals and Newport Exploration
The main advantage of trading using opposite Kiplin Metals and Newport Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kiplin Metals position performs unexpectedly, Newport Exploration 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 Newport Exploration will offset losses from the drop in Newport Exploration's long position.| Kiplin Metals vs. Algoma Steel Group | Kiplin Metals vs. Champion Iron | Kiplin Metals vs. International Zeolite Corp | Kiplin Metals vs. European Residential Real |
| Newport Exploration vs. Algoma Steel Group | Newport Exploration vs. Champion Iron | Newport Exploration vs. International Zeolite Corp | Newport Exploration vs. European Residential Real |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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