Correlation Between New Age and Eagle Plains
Can any of the company-specific risk be diversified away by investing in both New Age and Eagle Plains 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 New Age and Eagle Plains into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Age Metals and Eagle Plains Resources, you can compare the effects of market volatilities on New Age and Eagle Plains 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 New Age with a short position of Eagle Plains. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Age and Eagle Plains.
Diversification Opportunities for New Age and Eagle Plains
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Eagle is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding New Age Metals and Eagle Plains Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Plains Resources and New Age 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 New Age Metals are associated (or correlated) with Eagle Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Plains Resources has no effect on the direction of New Age i.e., New Age and Eagle Plains go up and down completely randomly.
Pair Corralation between New Age and Eagle Plains
Assuming the 90 days horizon New Age Metals is expected to under-perform the Eagle Plains. But the otc stock apears to be less risky and, when comparing its historical volatility, New Age Metals is 1.65 times less risky than Eagle Plains. The otc stock trades about -0.08 of its potential returns per unit of risk. The Eagle Plains Resources is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 7.00 in Eagle Plains Resources on November 5, 2024 and sell it today you would earn a total of 2.00 from holding Eagle Plains Resources or generate 28.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
New Age Metals vs. Eagle Plains Resources
Performance |
| Timeline |
| New Age Metals |
| Eagle Plains Resources |
New Age and Eagle Plains Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Age and Eagle Plains
The main advantage of trading using opposite New Age and Eagle Plains positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Age position performs unexpectedly, Eagle Plains 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 Eagle Plains will offset losses from the drop in Eagle Plains' long position.| New Age vs. Vision Lithium | New Age vs. Group Ten Metals | New Age vs. Generation Mining Limited | New Age vs. Nickel Creek Platinum |
| Eagle Plains vs. Norra Metals Corp | Eagle Plains vs. E79 Resources Corp | Eagle Plains vs. Voltage Metals Corp | Eagle Plains vs. Cantex Mine Development |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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