Correlation Between New Age and Fireweed Zinc
Can any of the company-specific risk be diversified away by investing in both New Age and Fireweed Zinc 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 Fireweed Zinc 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 Fireweed Zinc, you can compare the effects of market volatilities on New Age and Fireweed Zinc 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 Fireweed Zinc. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Age and Fireweed Zinc.
Diversification Opportunities for New Age and Fireweed Zinc
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Fireweed is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding New Age Metals and Fireweed Zinc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fireweed Zinc 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 Fireweed Zinc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fireweed Zinc has no effect on the direction of New Age i.e., New Age and Fireweed Zinc go up and down completely randomly.
Pair Corralation between New Age and Fireweed Zinc
Assuming the 90 days horizon New Age Metals is expected to generate 12.65 times more return on investment than Fireweed Zinc. However, New Age is 12.65 times more volatile than Fireweed Zinc. It trades about 0.12 of its potential returns per unit of risk. Fireweed Zinc is currently generating about 0.08 per unit of risk. If you would invest 2.54 in New Age Metals on October 26, 2024 and sell it today you would earn a total of 3.03 from holding New Age Metals or generate 119.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
New Age Metals vs. Fireweed Zinc
Performance |
| Timeline |
| New Age Metals |
| Fireweed Zinc |
New Age and Fireweed Zinc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Age and Fireweed Zinc
The main advantage of trading using opposite New Age and Fireweed Zinc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Age position performs unexpectedly, Fireweed Zinc 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 Fireweed Zinc will offset losses from the drop in Fireweed Zinc's 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 |
| Fireweed Zinc vs. Golden Goliath Resources | Fireweed Zinc vs. Monitor Ventures | Fireweed Zinc vs. Global Energy Metals | Fireweed Zinc vs. Lithium Australia NL |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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