Correlation Between Metals X and NGEx Minerals
Can any of the company-specific risk be diversified away by investing in both Metals X and NGEx 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 Metals X and NGEx Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metals X Limited and NGEx Minerals, you can compare the effects of market volatilities on Metals X and NGEx 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 Metals X with a short position of NGEx Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals X and NGEx Minerals.
Diversification Opportunities for Metals X and NGEx Minerals
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Metals and NGEx is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Metals X Limited and NGEx Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGEx Minerals and Metals X 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 Metals X Limited are associated (or correlated) with NGEx Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGEx Minerals has no effect on the direction of Metals X i.e., Metals X and NGEx Minerals go up and down completely randomly.
Pair Corralation between Metals X and NGEx Minerals
Assuming the 90 days horizon Metals X Limited is expected to under-perform the NGEx Minerals. In addition to that, Metals X is 2.59 times more volatile than NGEx Minerals. It trades about -0.07 of its total potential returns per unit of risk. NGEx Minerals is currently generating about 0.16 per unit of volatility. If you would invest 856.00 in NGEx Minerals on August 25, 2024 and sell it today you would earn a total of 57.00 from holding NGEx Minerals or generate 6.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Metals X Limited vs. NGEx Minerals
Performance |
| Timeline |
| Metals X Limited |
| NGEx Minerals |
Metals X and NGEx Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metals X and NGEx Minerals
The main advantage of trading using opposite Metals X and NGEx Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals X position performs unexpectedly, NGEx 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 NGEx Minerals will offset losses from the drop in NGEx Minerals' long position.| Metals X vs. Norra Metals Corp | Metals X vs. ZincX Resources Corp | Metals X vs. Nuinsco Resources Limited | Metals X vs. South Star Battery |
| NGEx Minerals vs. Norra Metals Corp | NGEx Minerals vs. ZincX Resources Corp | NGEx Minerals vs. Nuinsco Resources Limited | NGEx Minerals vs. South Star Battery |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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