Correlation Between North Bay and Diamond Fields
Can any of the company-specific risk be diversified away by investing in both North Bay and Diamond Fields 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 North Bay and Diamond Fields into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Bay Resources and Diamond Fields Resources, you can compare the effects of market volatilities on North Bay and Diamond Fields 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 North Bay with a short position of Diamond Fields. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Bay and Diamond Fields.
Diversification Opportunities for North Bay and Diamond Fields
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between North and Diamond is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding North Bay Resources and Diamond Fields Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Fields Resources and North Bay 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 North Bay Resources are associated (or correlated) with Diamond Fields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Fields Resources has no effect on the direction of North Bay i.e., North Bay and Diamond Fields go up and down completely randomly.
Pair Corralation between North Bay and Diamond Fields
Given the investment horizon of 90 days North Bay Resources is expected to generate 0.98 times more return on investment than Diamond Fields. However, North Bay Resources is 1.02 times less risky than Diamond Fields. It trades about 0.13 of its potential returns per unit of risk. Diamond Fields Resources is currently generating about 0.1 per unit of risk. If you would invest 0.03 in North Bay Resources on September 1, 2024 and sell it today you would earn a total of 0.06 from holding North Bay Resources or generate 200.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
North Bay Resources vs. Diamond Fields Resources
Performance |
| Timeline |
| North Bay Resources |
| Diamond Fields Resources |
North Bay and Diamond Fields Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Bay and Diamond Fields
The main advantage of trading using opposite North Bay and Diamond Fields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Bay position performs unexpectedly, Diamond Fields 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 Diamond Fields will offset losses from the drop in Diamond Fields' long position.| North Bay vs. Defiance Silver Corp | North Bay vs. HUMANA INC | North Bay vs. SCOR PK | North Bay vs. Aquagold International |
| Diamond Fields vs. Gemfields Group Limited | Diamond Fields vs. Star Royalties | Diamond Fields vs. Defiance Silver Corp | Diamond Fields vs. GoGold Resources |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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