Correlation Between NioCorp Developments and South32
Can any of the company-specific risk be diversified away by investing in both NioCorp Developments and South32 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 South32 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 South32 Limited, you can compare the effects of market volatilities on NioCorp Developments and South32 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 South32. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and South32.
Diversification Opportunities for NioCorp Developments and South32
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between NioCorp and South32 is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and South32 Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South32 Limited 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 South32. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South32 Limited has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and South32 go up and down completely randomly.
Pair Corralation between NioCorp Developments and South32
Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to generate 8.82 times more return on investment than South32. However, NioCorp Developments is 8.82 times more volatile than South32 Limited. It trades about 0.04 of its potential returns per unit of risk. South32 Limited is currently generating about 0.02 per unit of risk. If you would invest 80.00 in NioCorp Developments Ltd on September 2, 2024 and sell it today you would earn a total of 53.00 from holding NioCorp Developments Ltd or generate 66.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.04% |
| Values | Daily Returns |
NioCorp Developments Ltd vs. South32 Limited
Performance |
| Timeline |
| NioCorp Developments |
| South32 Limited |
NioCorp Developments and South32 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NioCorp Developments and South32
The main advantage of trading using opposite NioCorp Developments and South32 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NioCorp Developments position performs unexpectedly, South32 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 South32 will offset losses from the drop in South32'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 |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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