Correlation Between Native Mineral and Resource Base
Can any of the company-specific risk be diversified away by investing in both Native Mineral and Resource Base 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 Native Mineral and Resource Base into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Native Mineral Resources and Resource Base, you can compare the effects of market volatilities on Native Mineral and Resource Base 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 Native Mineral with a short position of Resource Base. Check out your portfolio center. Please also check ongoing floating volatility patterns of Native Mineral and Resource Base.
Diversification Opportunities for Native Mineral and Resource Base
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Native and Resource is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Native Mineral Resources and Resource Base in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resource Base and Native Mineral 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 Native Mineral Resources are associated (or correlated) with Resource Base. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resource Base has no effect on the direction of Native Mineral i.e., Native Mineral and Resource Base go up and down completely randomly.
Pair Corralation between Native Mineral and Resource Base
Assuming the 90 days trading horizon Native Mineral Resources is expected to generate 1.5 times more return on investment than Resource Base. However, Native Mineral is 1.5 times more volatile than Resource Base. It trades about 0.32 of its potential returns per unit of risk. Resource Base is currently generating about -0.23 per unit of risk. If you would invest 4.00 in Native Mineral Resources on November 9, 2024 and sell it today you would earn a total of 1.50 from holding Native Mineral Resources or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Native Mineral Resources vs. Resource Base
Performance |
| Timeline |
| Native Mineral Resources |
| Resource Base |
Native Mineral and Resource Base Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Native Mineral and Resource Base
The main advantage of trading using opposite Native Mineral and Resource Base positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Native Mineral position performs unexpectedly, Resource Base 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 Resource Base will offset losses from the drop in Resource Base's long position.| Native Mineral vs. Future Generation Global | Native Mineral vs. Rubicon Water | Native Mineral vs. Kinatico | Native Mineral vs. Jade Gas Holdings |
| Resource Base vs. Skycity Entertainment Group | Resource Base vs. AiMedia Technologies | Resource Base vs. Mayfield Childcare | Resource Base vs. Sports Entertainment Group |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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