Correlation Between Metalla Royalty and New Pacific
Can any of the company-specific risk be diversified away by investing in both Metalla Royalty and New Pacific 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 Metalla Royalty and New Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metalla Royalty Streaming and New Pacific Metals, you can compare the effects of market volatilities on Metalla Royalty and New Pacific 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 Metalla Royalty with a short position of New Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalla Royalty and New Pacific.
Diversification Opportunities for Metalla Royalty and New Pacific
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Metalla and New is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Metalla Royalty Streaming and New Pacific Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Pacific Metals and Metalla Royalty 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 Metalla Royalty Streaming are associated (or correlated) with New Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Pacific Metals has no effect on the direction of Metalla Royalty i.e., Metalla Royalty and New Pacific go up and down completely randomly.
Pair Corralation between Metalla Royalty and New Pacific
Considering the 90-day investment horizon Metalla Royalty Streaming is expected to under-perform the New Pacific. In addition to that, Metalla Royalty is 1.0 times more volatile than New Pacific Metals. It trades about -0.25 of its total potential returns per unit of risk. New Pacific Metals is currently generating about -0.22 per unit of volatility. If you would invest 191.00 in New Pacific Metals on August 27, 2024 and sell it today you would lose (34.00) from holding New Pacific Metals or give up 17.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metalla Royalty Streaming vs. New Pacific Metals
Performance |
| Timeline |
| Metalla Royalty Streaming |
| New Pacific Metals |
Metalla Royalty and New Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalla Royalty and New Pacific
The main advantage of trading using opposite Metalla Royalty and New Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalla Royalty position performs unexpectedly, New Pacific 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 New Pacific will offset losses from the drop in New Pacific's long position.| Metalla Royalty vs. Triple Flag Precious | Metalla Royalty vs. Endeavour Silver Corp | Metalla Royalty vs. SilverCrest Metals | Metalla Royalty vs. Gatos Silver |
| New Pacific vs. Endeavour Silver Corp | New Pacific vs. Metalla Royalty Streaming | New Pacific vs. Hecla Mining | New Pacific vs. Gatos Silver |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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