Correlation Between Nickel Mines and Iluka Resources
Can any of the company-specific risk be diversified away by investing in both Nickel Mines and Iluka Resources 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 Iluka Resources 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 Iluka Resources Limited, you can compare the effects of market volatilities on Nickel Mines and Iluka Resources 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 Iluka Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nickel Mines and Iluka Resources.
Diversification Opportunities for Nickel Mines and Iluka Resources
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nickel and Iluka is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Nickel Mines Limited and Iluka Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iluka Resources 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 Iluka Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iluka Resources has no effect on the direction of Nickel Mines i.e., Nickel Mines and Iluka Resources go up and down completely randomly.
Pair Corralation between Nickel Mines and Iluka Resources
Assuming the 90 days horizon Nickel Mines Limited is expected to generate 1.55 times more return on investment than Iluka Resources. However, Nickel Mines is 1.55 times more volatile than Iluka Resources Limited. It trades about 0.02 of its potential returns per unit of risk. Iluka Resources Limited is currently generating about -0.06 per unit of risk. If you would invest 59.00 in Nickel Mines Limited on September 3, 2024 and sell it today you would lose (4.00) from holding Nickel Mines Limited or give up 6.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 64.92% |
| Values | Daily Returns |
Nickel Mines Limited vs. Iluka Resources Limited
Performance |
| Timeline |
| Nickel Mines Limited |
| Iluka Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nickel Mines and Iluka Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nickel Mines and Iluka Resources
The main advantage of trading using opposite Nickel Mines and Iluka Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nickel Mines position performs unexpectedly, Iluka Resources 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 Iluka Resources will offset losses from the drop in Iluka Resources' 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 |
| Iluka Resources vs. Iluka Resources Ltd | Iluka Resources vs. China Rare Earth | Iluka Resources vs. Greenland Minerals And | Iluka Resources vs. Mkango 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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