Correlation Between NioCorp Developments and Aerofoam Metals
Can any of the company-specific risk be diversified away by investing in both NioCorp Developments and Aerofoam Metals 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 NioCorp Developments and Aerofoam Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NioCorp Developments Ltd and Aerofoam Metals, you can compare the effects of market volatilities on NioCorp Developments and Aerofoam Metals 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 NioCorp Developments with a short position of Aerofoam Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and Aerofoam Metals.
Diversification Opportunities for NioCorp Developments and Aerofoam Metals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NioCorp and Aerofoam is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and Aerofoam Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerofoam Metals and NioCorp Developments 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 NioCorp Developments Ltd are associated (or correlated) with Aerofoam Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerofoam Metals has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and Aerofoam Metals go up and down completely randomly.
Pair Corralation between NioCorp Developments and Aerofoam Metals
Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to under-perform the Aerofoam Metals. In addition to that, NioCorp Developments is 1.02 times more volatile than Aerofoam Metals. It trades about -0.05 of its total potential returns per unit of risk. Aerofoam Metals is currently generating about -0.05 per unit of volatility. If you would invest 0.09 in Aerofoam Metals on August 31, 2024 and sell it today you would lose (0.08) from holding Aerofoam Metals or give up 88.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
NioCorp Developments Ltd vs. Aerofoam Metals
Performance |
| Timeline |
| NioCorp Developments |
| Aerofoam Metals |
NioCorp Developments and Aerofoam Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NioCorp Developments and Aerofoam Metals
The main advantage of trading using opposite NioCorp Developments and Aerofoam Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NioCorp Developments position performs unexpectedly, Aerofoam Metals 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 Aerofoam Metals will offset losses from the drop in Aerofoam Metals' long position.| NioCorp Developments vs. FTAI Aviation Ltd | NioCorp Developments vs. United Rentals | NioCorp Developments vs. Brunswick | NioCorp Developments vs. Wabash National |
| Aerofoam Metals vs. Porsche Automobile Holding | Aerofoam Metals vs. Ferrari NV | Aerofoam Metals vs. Toyota Motor | Aerofoam Metals vs. General Motors |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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