Correlation Between New Age and Manganese
Can any of the company-specific risk be diversified away by investing in both New Age and Manganese 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 Manganese 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 Manganese X Energy, you can compare the effects of market volatilities on New Age and Manganese 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 Manganese. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Age and Manganese.
Diversification Opportunities for New Age and Manganese
Pay attention - limited upside
The 3 months correlation between New and Manganese is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding New Age Metals and Manganese X Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manganese X Energy 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 Manganese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manganese X Energy has no effect on the direction of New Age i.e., New Age and Manganese go up and down completely randomly.
Pair Corralation between New Age and Manganese
Assuming the 90 days horizon New Age Metals is expected to under-perform the Manganese. In addition to that, New Age is 1.32 times more volatile than Manganese X Energy. It trades about -0.08 of its total potential returns per unit of risk. Manganese X Energy is currently generating about 0.01 per unit of volatility. If you would invest 2.50 in Manganese X Energy on September 1, 2024 and sell it today you would lose (0.20) from holding Manganese X Energy or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Age Metals vs. Manganese X Energy
Performance |
| Timeline |
| New Age Metals |
| Manganese X Energy |
New Age and Manganese Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Age and Manganese
The main advantage of trading using opposite New Age and Manganese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Age position performs unexpectedly, Manganese 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 Manganese will offset losses from the drop in Manganese's long position.| New Age vs. South32 Limited | New Age vs. NioCorp Developments Ltd | New Age vs. HUMANA INC | New Age vs. SCOR PK |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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