Correlation Between Newport Exploration and Kiplin Metals
Can any of the company-specific risk be diversified away by investing in both Newport Exploration and Kiplin Metals 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 Newport Exploration and Kiplin Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newport Exploration and Kiplin Metals, you can compare the effects of market volatilities on Newport Exploration and Kiplin Metals 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 Newport Exploration with a short position of Kiplin Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newport Exploration and Kiplin Metals.
Diversification Opportunities for Newport Exploration and Kiplin Metals
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Newport and Kiplin is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Newport Exploration and Kiplin Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiplin Metals and Newport Exploration 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 Newport Exploration are associated (or correlated) with Kiplin Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiplin Metals has no effect on the direction of Newport Exploration i.e., Newport Exploration and Kiplin Metals go up and down completely randomly.
Pair Corralation between Newport Exploration and Kiplin Metals
Assuming the 90 days horizon Newport Exploration is expected to under-perform the Kiplin Metals. But the stock apears to be less risky and, when comparing its historical volatility, Newport Exploration is 1.21 times less risky than Kiplin Metals. The stock trades about -0.06 of its potential returns per unit of risk. The Kiplin Metals is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 39.00 in Kiplin Metals on September 3, 2024 and sell it today you would lose (12.00) from holding Kiplin Metals or give up 30.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newport Exploration vs. Kiplin Metals
Performance |
| Timeline |
| Newport Exploration |
| Kiplin Metals |
Newport Exploration and Kiplin Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newport Exploration and Kiplin Metals
The main advantage of trading using opposite Newport Exploration and Kiplin Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newport Exploration position performs unexpectedly, Kiplin Metals 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 Kiplin Metals will offset losses from the drop in Kiplin Metals' long position.| Newport Exploration vs. Algoma Steel Group | Newport Exploration vs. Champion Iron | Newport Exploration vs. International Zeolite Corp | Newport Exploration vs. European Residential Real |
| Kiplin Metals vs. Algoma Steel Group | Kiplin Metals vs. Champion Iron | Kiplin Metals vs. International Zeolite Corp | Kiplin Metals vs. European Residential Real |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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