Correlation Between Nickel Mines and Québec Nickel
Can any of the company-specific risk be diversified away by investing in both Nickel Mines and Québec Nickel 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 Québec Nickel 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 Qubec Nickel Corp, you can compare the effects of market volatilities on Nickel Mines and Québec Nickel 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 Québec Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nickel Mines and Québec Nickel.
Diversification Opportunities for Nickel Mines and Québec Nickel
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nickel and Québec is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nickel Mines Limited and Qubec Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qubec Nickel Corp 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 Québec Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qubec Nickel Corp has no effect on the direction of Nickel Mines i.e., Nickel Mines and Québec Nickel go up and down completely randomly.
Pair Corralation between Nickel Mines and Québec Nickel
Assuming the 90 days horizon Nickel Mines is expected to generate 8.88 times less return on investment than Québec Nickel. But when comparing it to its historical volatility, Nickel Mines Limited is 5.3 times less risky than Québec Nickel. It trades about 0.04 of its potential returns per unit of risk. Qubec Nickel Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 8.21 in Qubec Nickel Corp on November 9, 2024 and sell it today you would lose (1.77) from holding Qubec Nickel Corp or give up 21.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nickel Mines Limited vs. Qubec Nickel Corp
Performance |
| Timeline |
| Nickel Mines Limited |
| Qubec Nickel Corp |
Nickel Mines and Québec Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nickel Mines and Québec Nickel
The main advantage of trading using opposite Nickel Mines and Québec Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nickel Mines position performs unexpectedly, Québec Nickel 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 Québec Nickel will offset losses from the drop in Québec Nickel's long position.| Nickel Mines vs. Commerce Resources Corp | Nickel Mines vs. Great Western Minerals | Nickel Mines vs. Silver Elephant Mining | Nickel Mines vs. Eskay Mining Corp |
| Québec Nickel vs. Commerce Resources Corp | Québec Nickel vs. Great Western Minerals | Québec Nickel vs. Silver Elephant Mining | Québec Nickel vs. Eskay Mining 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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