Correlation Between NioCorp Developments and Searchlight Minerals
Can any of the company-specific risk be diversified away by investing in both NioCorp Developments and Searchlight Minerals 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 Searchlight Minerals 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 Searchlight Minerals Corp, you can compare the effects of market volatilities on NioCorp Developments and Searchlight Minerals 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 Searchlight Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and Searchlight Minerals.
Diversification Opportunities for NioCorp Developments and Searchlight Minerals
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NioCorp and Searchlight is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and Searchlight Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Searchlight Minerals 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 Searchlight Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Searchlight Minerals Corp has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and Searchlight Minerals go up and down completely randomly.
Pair Corralation between NioCorp Developments and Searchlight Minerals
Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to under-perform the Searchlight Minerals. But the stock apears to be less risky and, when comparing its historical volatility, NioCorp Developments Ltd is 6.62 times less risky than Searchlight Minerals. The stock trades about -0.4 of its potential returns per unit of risk. The Searchlight Minerals Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 0.43 in Searchlight Minerals Corp on August 31, 2024 and sell it today you would lose (0.20) from holding Searchlight Minerals Corp or give up 46.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NioCorp Developments Ltd vs. Searchlight Minerals Corp
Performance |
| Timeline |
| NioCorp Developments |
| Searchlight Minerals Corp |
NioCorp Developments and Searchlight Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NioCorp Developments and Searchlight Minerals
The main advantage of trading using opposite NioCorp Developments and Searchlight Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NioCorp Developments position performs unexpectedly, Searchlight Minerals 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 Searchlight Minerals will offset losses from the drop in Searchlight Minerals' long position.| NioCorp Developments vs. FTAI Aviation Ltd | NioCorp Developments vs. United Rentals | NioCorp Developments vs. Brunswick | NioCorp Developments vs. Wabash National |
| Searchlight Minerals vs. South32 Limited | Searchlight Minerals vs. NioCorp Developments Ltd | Searchlight Minerals vs. HUMANA INC | Searchlight Minerals vs. SCOR PK |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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