Correlation Between Nickel Mines and Silver Elephant
Can any of the company-specific risk be diversified away by investing in both Nickel Mines and Silver Elephant 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 Silver Elephant 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 Silver Elephant Mining, you can compare the effects of market volatilities on Nickel Mines and Silver Elephant 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 Silver Elephant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nickel Mines and Silver Elephant.
Diversification Opportunities for Nickel Mines and Silver Elephant
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nickel and Silver is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nickel Mines Limited and Silver Elephant Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Elephant Mining 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 Silver Elephant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Elephant Mining has no effect on the direction of Nickel Mines i.e., Nickel Mines and Silver Elephant go up and down completely randomly.
Pair Corralation between Nickel Mines and Silver Elephant
Assuming the 90 days horizon Nickel Mines is expected to generate 5.27 times less return on investment than Silver Elephant. But when comparing it to its historical volatility, Nickel Mines Limited is 2.15 times less risky than Silver Elephant. It trades about 0.01 of its potential returns per unit of risk. Silver Elephant Mining is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 36.00 in Silver Elephant Mining on August 29, 2024 and sell it today you would lose (8.00) from holding Silver Elephant Mining or give up 22.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nickel Mines Limited vs. Silver Elephant Mining
Performance |
| Timeline |
| Nickel Mines Limited |
| Silver Elephant Mining |
Nickel Mines and Silver Elephant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nickel Mines and Silver Elephant
The main advantage of trading using opposite Nickel Mines and Silver Elephant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nickel Mines position performs unexpectedly, Silver Elephant 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 Silver Elephant will offset losses from the drop in Silver Elephant'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 |
| Silver Elephant vs. Commerce Resources Corp | Silver Elephant vs. Great Western Minerals | Silver Elephant vs. StrikePoint Gold | Silver Elephant 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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