Correlation Between NioCorp Developments and Small Cap
Can any of the company-specific risk be diversified away by investing in both NioCorp Developments and Small Cap 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 Small Cap 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 Small Cap Premium, you can compare the effects of market volatilities on NioCorp Developments and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and Small Cap.
Diversification Opportunities for NioCorp Developments and Small Cap
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NioCorp and Small is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and Small Cap Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Premium 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Premium has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and Small Cap go up and down completely randomly.
Pair Corralation between NioCorp Developments and Small Cap
Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to under-perform the Small Cap. In addition to that, NioCorp Developments is 6.13 times more volatile than Small Cap Premium. It trades about -0.28 of its total potential returns per unit of risk. Small Cap Premium is currently generating about -0.03 per unit of volatility. If you would invest 2,467 in Small Cap Premium on September 2, 2024 and sell it today you would lose (7.00) from holding Small Cap Premium or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NioCorp Developments Ltd vs. Small Cap Premium
Performance |
| Timeline |
| NioCorp Developments |
| Small Cap Premium |
NioCorp Developments and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NioCorp Developments and Small Cap
The main advantage of trading using opposite NioCorp Developments and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NioCorp Developments position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap'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 |
| Small Cap vs. RiverNorth Specialty Finance | Small Cap vs. Royce Micro Cap | Small Cap vs. First Trust Enhanced | Small Cap vs. Voya Global Advantage |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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