Correlation Between NioCorp Developments and American Resources
Can any of the company-specific risk be diversified away by investing in both NioCorp Developments and American Resources 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 American Resources 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 American Resources Corp, you can compare the effects of market volatilities on NioCorp Developments and American Resources 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 American Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and American Resources.
Diversification Opportunities for NioCorp Developments and American Resources
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NioCorp and American is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and American Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Resources Corp 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 American Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Resources Corp has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and American Resources go up and down completely randomly.
Pair Corralation between NioCorp Developments and American Resources
Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to under-perform the American Resources. But the stock apears to be less risky and, when comparing its historical volatility, NioCorp Developments Ltd is 1.33 times less risky than American Resources. The stock trades about -0.18 of its potential returns per unit of risk. The American Resources Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 83.00 in American Resources Corp on August 27, 2024 and sell it today you would earn a total of 40.00 from holding American Resources Corp or generate 48.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NioCorp Developments Ltd vs. American Resources Corp
Performance |
| Timeline |
| NioCorp Developments |
| American Resources Corp |
NioCorp Developments and American Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NioCorp Developments and American Resources
The main advantage of trading using opposite NioCorp Developments and American Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NioCorp Developments position performs unexpectedly, American Resources 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 American Resources will offset losses from the drop in American Resources' long position.| NioCorp Developments vs. Vale SA ADR | NioCorp Developments vs. Teck Resources Ltd | NioCorp Developments vs. BHP Group Limited | NioCorp Developments vs. Glencore PLC ADR |
| American Resources vs. Westwater Resources | American Resources vs. Aqua Metals | American Resources vs. Pioneer Power Solutions | American Resources vs. Hall of Fame |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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