Correlation Between New Pacific and Metalla Royalty
Can any of the company-specific risk be diversified away by investing in both New Pacific and Metalla Royalty 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 New Pacific and Metalla Royalty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Pacific Metals and Metalla Royalty Streaming, you can compare the effects of market volatilities on New Pacific and Metalla Royalty 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 New Pacific with a short position of Metalla Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Pacific and Metalla Royalty.
Diversification Opportunities for New Pacific and Metalla Royalty
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between New and Metalla is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding New Pacific Metals and Metalla Royalty Streaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalla Royalty Streaming and New Pacific 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 New Pacific Metals are associated (or correlated) with Metalla Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalla Royalty Streaming has no effect on the direction of New Pacific i.e., New Pacific and Metalla Royalty go up and down completely randomly.
Pair Corralation between New Pacific and Metalla Royalty
Given the investment horizon of 90 days New Pacific Metals is expected to under-perform the Metalla Royalty. But the stock apears to be less risky and, when comparing its historical volatility, New Pacific Metals is 1.11 times less risky than Metalla Royalty. The stock trades about -0.03 of its potential returns per unit of risk. The Metalla Royalty Streaming is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 256.00 in Metalla Royalty Streaming on October 20, 2024 and sell it today you would earn a total of 15.00 from holding Metalla Royalty Streaming or generate 5.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Pacific Metals vs. Metalla Royalty Streaming
Performance |
| Timeline |
| New Pacific Metals |
| Metalla Royalty Streaming |
New Pacific and Metalla Royalty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Pacific and Metalla Royalty
The main advantage of trading using opposite New Pacific and Metalla Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Pacific position performs unexpectedly, Metalla Royalty 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 Metalla Royalty will offset losses from the drop in Metalla Royalty's long position.| New Pacific vs. Endeavour Silver Corp | New Pacific vs. Metalla Royalty Streaming | New Pacific vs. Hecla Mining | New Pacific vs. Gatos Silver |
| Metalla Royalty vs. Triple Flag Precious | Metalla Royalty vs. Endeavour Silver Corp | Metalla Royalty vs. SilverCrest Metals | Metalla Royalty vs. Gatos Silver |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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