Correlation Between Nickel Mines and Silver Spruce
Can any of the company-specific risk be diversified away by investing in both Nickel Mines and Silver Spruce 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 Spruce 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 Spruce Resources, you can compare the effects of market volatilities on Nickel Mines and Silver Spruce 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 Spruce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nickel Mines and Silver Spruce.
Diversification Opportunities for Nickel Mines and Silver Spruce
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nickel and Silver is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Nickel Mines Limited and Silver Spruce Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Spruce 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 Silver Spruce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Spruce Resources has no effect on the direction of Nickel Mines i.e., Nickel Mines and Silver Spruce go up and down completely randomly.
Pair Corralation between Nickel Mines and Silver Spruce
Assuming the 90 days horizon Nickel Mines is expected to generate 2.13 times less return on investment than Silver Spruce. But when comparing it to its historical volatility, Nickel Mines Limited is 2.72 times less risky than Silver Spruce. It trades about 0.04 of its potential returns per unit of risk. Silver Spruce Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1.17 in Silver Spruce Resources on November 9, 2024 and sell it today you would lose (0.77) from holding Silver Spruce Resources or give up 65.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.89% |
| Values | Daily Returns |
Nickel Mines Limited vs. Silver Spruce Resources
Performance |
| Timeline |
| Nickel Mines Limited |
| Silver Spruce Resources |
Nickel Mines and Silver Spruce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nickel Mines and Silver Spruce
The main advantage of trading using opposite Nickel Mines and Silver Spruce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nickel Mines position performs unexpectedly, Silver Spruce 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 Spruce will offset losses from the drop in Silver Spruce'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 |
| Silver Spruce vs. Golden Goliath Resources | Silver Spruce vs. Portofino Resources | Silver Spruce vs. Freegold Ventures Limited | Silver Spruce vs. Bravada Gold |
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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