Correlation Between Nickel Creek and Rio Tinto
Can any of the company-specific risk be diversified away by investing in both Nickel Creek and Rio Tinto 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 Rio Tinto 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 Rio Tinto ADR, you can compare the effects of market volatilities on Nickel Creek and Rio Tinto 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 Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nickel Creek and Rio Tinto.
Diversification Opportunities for Nickel Creek and Rio Tinto
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nickel and Rio is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Nickel Creek Platinum and Rio Tinto ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto ADR 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 Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto ADR has no effect on the direction of Nickel Creek i.e., Nickel Creek and Rio Tinto go up and down completely randomly.
Pair Corralation between Nickel Creek and Rio Tinto
Assuming the 90 days horizon Nickel Creek Platinum is expected to generate 2.55 times more return on investment than Rio Tinto. However, Nickel Creek is 2.55 times more volatile than Rio Tinto ADR. It trades about 0.04 of its potential returns per unit of risk. Rio Tinto ADR is currently generating about -0.08 per unit of risk. If you would invest 56.00 in Nickel Creek Platinum on September 1, 2024 and sell it today you would earn a total of 1.00 from holding Nickel Creek Platinum or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nickel Creek Platinum vs. Rio Tinto ADR
Performance |
| Timeline |
| Nickel Creek Platinum |
| Rio Tinto ADR |
Nickel Creek and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nickel Creek and Rio Tinto
The main advantage of trading using opposite Nickel Creek and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nickel Creek position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| Nickel Creek vs. South32 Limited | Nickel Creek vs. NioCorp Developments Ltd | Nickel Creek vs. HUMANA INC | Nickel Creek vs. SCOR PK |
| Rio Tinto vs. NioCorp Developments Ltd | Rio Tinto vs. Teck Resources Ltd | Rio Tinto vs. Sigma Lithium Resources | Rio Tinto vs. MP Materials Corp |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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