Correlation Between Latin Metals and Flying Nickel
Can any of the company-specific risk be diversified away by investing in both Latin Metals and Flying 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 Latin Metals and Flying Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Latin Metals and Flying Nickel Mining, you can compare the effects of market volatilities on Latin Metals and Flying 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 Latin Metals with a short position of Flying Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Latin Metals and Flying Nickel.
Diversification Opportunities for Latin Metals and Flying Nickel
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Latin and Flying is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Latin Metals and Flying Nickel Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flying Nickel Mining and Latin 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 Latin Metals are associated (or correlated) with Flying Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flying Nickel Mining has no effect on the direction of Latin Metals i.e., Latin Metals and Flying Nickel go up and down completely randomly.
Pair Corralation between Latin Metals and Flying Nickel
Assuming the 90 days horizon Latin Metals is expected to under-perform the Flying Nickel. But the otc stock apears to be less risky and, when comparing its historical volatility, Latin Metals is 2.68 times less risky than Flying Nickel. The otc stock trades about -0.21 of its potential returns per unit of risk. The Flying Nickel Mining is currently generating about 0.11 of returns per unit of risk over similar time horizon. 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 |
Latin Metals vs. Flying Nickel Mining
Performance |
| Timeline |
| Latin Metals |
| Flying Nickel Mining |
Latin Metals and Flying Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Latin Metals and Flying Nickel
The main advantage of trading using opposite Latin Metals and Flying Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Latin Metals position performs unexpectedly, Flying 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 Flying Nickel will offset losses from the drop in Flying Nickel's long position.The idea behind Latin Metals and Flying Nickel Mining 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.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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