Correlation Between NioCorp Developments and Independence Gold
Can any of the company-specific risk be diversified away by investing in both NioCorp Developments and Independence Gold 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 Independence Gold 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 Independence Gold Corp, you can compare the effects of market volatilities on NioCorp Developments and Independence Gold 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 Independence Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and Independence Gold.
Diversification Opportunities for NioCorp Developments and Independence Gold
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NioCorp and Independence is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and Independence Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independence Gold 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 Independence Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independence Gold Corp has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and Independence Gold go up and down completely randomly.
Pair Corralation between NioCorp Developments and Independence Gold
Allowing for the 90-day total investment horizon NioCorp Developments is expected to generate 1.54 times less return on investment than Independence Gold. But when comparing it to its historical volatility, NioCorp Developments Ltd is 1.22 times less risky than Independence Gold. It trades about 0.04 of its potential returns per unit of risk. Independence Gold Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6.37 in Independence Gold Corp on September 2, 2024 and sell it today you would earn a total of 9.63 from holding Independence Gold Corp or generate 151.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NioCorp Developments Ltd vs. Independence Gold Corp
Performance |
| Timeline |
| NioCorp Developments |
| Independence Gold Corp |
NioCorp Developments and Independence Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NioCorp Developments and Independence Gold
The main advantage of trading using opposite NioCorp Developments and Independence Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NioCorp Developments position performs unexpectedly, Independence Gold 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 Independence Gold will offset losses from the drop in Independence Gold's long position.| NioCorp Developments vs. Teck Resources Ltd | NioCorp Developments vs. Sigma Lithium Resources | NioCorp Developments vs. Vale SA ADR | NioCorp Developments vs. Sayona Mining Limited |
| Independence Gold vs. Heliostar Metals | Independence Gold vs. Revival Gold | Independence Gold vs. Cabral Gold | Independence Gold vs. Cassiar Gold Corp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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