Correlation Between Nickel Creek and RTG Mining
Can any of the company-specific risk be diversified away by investing in both Nickel Creek and RTG Mining 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 Nickel Creek and RTG Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nickel Creek Platinum and RTG Mining, you can compare the effects of market volatilities on Nickel Creek and RTG Mining 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 Nickel Creek with a short position of RTG Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nickel Creek and RTG Mining.
Diversification Opportunities for Nickel Creek and RTG Mining
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nickel and RTG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nickel Creek Platinum and RTG Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTG Mining and Nickel Creek 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 Nickel Creek Platinum are associated (or correlated) with RTG Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTG Mining has no effect on the direction of Nickel Creek i.e., Nickel Creek and RTG Mining go up and down completely randomly.
Pair Corralation between Nickel Creek and RTG Mining
Assuming the 90 days trading horizon Nickel Creek is expected to generate 2.34 times less return on investment than RTG Mining. But when comparing it to its historical volatility, Nickel Creek Platinum is 6.32 times less risky than RTG Mining. It trades about 0.18 of its potential returns per unit of risk. RTG Mining is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4.00 in RTG Mining on August 24, 2024 and sell it today you would earn a total of 0.00 from holding RTG Mining or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nickel Creek Platinum vs. RTG Mining
Performance |
| Timeline |
| Nickel Creek Platinum |
| RTG Mining |
Nickel Creek and RTG Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nickel Creek and RTG Mining
The main advantage of trading using opposite Nickel Creek and RTG Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nickel Creek position performs unexpectedly, RTG Mining 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 RTG Mining will offset losses from the drop in RTG Mining's long position.The idea behind Nickel Creek Platinum and RTG Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| RTG Mining vs. InPlay Oil Corp | RTG Mining vs. Rocky Mountain Liquor | RTG Mining vs. Diamond Estates Wines | RTG Mining vs. Northstar Clean Technologies |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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