Correlation Between Nicola Mining and Signature Resources
Can any of the company-specific risk be diversified away by investing in both Nicola Mining and Signature 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 Nicola Mining and Signature Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nicola Mining and Signature Resources, you can compare the effects of market volatilities on Nicola Mining and Signature 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 Nicola Mining with a short position of Signature Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nicola Mining and Signature Resources.
Diversification Opportunities for Nicola Mining and Signature Resources
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nicola and Signature is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Nicola Mining and Signature Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signature Resources and Nicola Mining 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 Nicola Mining are associated (or correlated) with Signature Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signature Resources has no effect on the direction of Nicola Mining i.e., Nicola Mining and Signature Resources go up and down completely randomly.
Pair Corralation between Nicola Mining and Signature Resources
Assuming the 90 days horizon Nicola Mining is expected to generate 5.02 times less return on investment than Signature Resources. But when comparing it to its historical volatility, Nicola Mining is 2.27 times less risky than Signature Resources. It trades about 0.03 of its potential returns per unit of risk. Signature Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Signature Resources on September 14, 2024 and sell it today you would earn a total of 1.00 from holding Signature Resources or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nicola Mining vs. Signature Resources
Performance |
| Timeline |
| Nicola Mining |
| Signature Resources |
Nicola Mining and Signature Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nicola Mining and Signature Resources
The main advantage of trading using opposite Nicola Mining and Signature Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nicola Mining position performs unexpectedly, Signature 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 Signature Resources will offset losses from the drop in Signature Resources' long position.| Nicola Mining vs. Foraco International SA | Nicola Mining vs. Geodrill Limited | Nicola Mining vs. Major Drilling Group | Nicola Mining vs. Bri Chem Corp |
| Signature Resources vs. Canadian Imperial Bank | Signature Resources vs. US Financial 15 | Signature Resources vs. Definity Financial Corp | Signature Resources vs. Nicola Mining |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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