Correlation Between Nickel Mines and Eramet SA
Can any of the company-specific risk be diversified away by investing in both Nickel Mines and Eramet SA 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 Mines and Eramet SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nickel Mines Limited and Eramet SA ADR, you can compare the effects of market volatilities on Nickel Mines and Eramet SA 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 Mines with a short position of Eramet SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nickel Mines and Eramet SA.
Diversification Opportunities for Nickel Mines and Eramet SA
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nickel and Eramet is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Nickel Mines Limited and Eramet SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eramet SA ADR and Nickel Mines 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 Mines Limited are associated (or correlated) with Eramet SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eramet SA ADR has no effect on the direction of Nickel Mines i.e., Nickel Mines and Eramet SA go up and down completely randomly.
Pair Corralation between Nickel Mines and Eramet SA
Assuming the 90 days horizon Nickel Mines Limited is expected to generate 1.07 times more return on investment than Eramet SA. However, Nickel Mines is 1.07 times more volatile than Eramet SA ADR. It trades about -0.16 of its potential returns per unit of risk. Eramet SA ADR is currently generating about -0.25 per unit of risk. If you would invest 62.00 in Nickel Mines Limited on September 3, 2024 and sell it today you would lose (7.00) from holding Nickel Mines Limited or give up 11.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Nickel Mines Limited vs. Eramet SA ADR
Performance |
| Timeline |
| Nickel Mines Limited |
| Eramet SA ADR |
Nickel Mines and Eramet SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nickel Mines and Eramet SA
The main advantage of trading using opposite Nickel Mines and Eramet SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nickel Mines position performs unexpectedly, Eramet SA 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 Eramet SA will offset losses from the drop in Eramet SA's long position.| Nickel Mines vs. IGO Limited | Nickel Mines vs. Qubec Nickel Corp | Nickel Mines vs. Mineral Resources Limited | Nickel Mines vs. Surge Copper Corp |
| Eramet SA vs. Qubec Nickel Corp | Eramet SA vs. IGO Limited | Eramet SA vs. Avarone Metals | Eramet SA vs. Adriatic Metals PLC |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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