Correlation Between NYSE Composite and Prime Mining
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Prime Mining 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 NYSE Composite and Prime Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Prime Mining Corp, you can compare the effects of market volatilities on NYSE Composite and Prime Mining 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 NYSE Composite with a short position of Prime Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Prime Mining.
Diversification Opportunities for NYSE Composite and Prime Mining
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NYSE and Prime is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Prime Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Mining Corp and NYSE Composite 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 NYSE Composite are associated (or correlated) with Prime Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Mining Corp has no effect on the direction of NYSE Composite i.e., NYSE Composite and Prime Mining go up and down completely randomly.
Pair Corralation between NYSE Composite and Prime Mining
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.1 times more return on investment than Prime Mining. However, NYSE Composite is 10.38 times less risky than Prime Mining. It trades about 0.12 of its potential returns per unit of risk. Prime Mining Corp is currently generating about -0.03 per unit of risk. If you would invest 1,950,655 in NYSE Composite on August 25, 2024 and sell it today you would earn a total of 61,690 from holding NYSE Composite or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Prime Mining Corp
Performance |
| Timeline |
NYSE Composite and Prime Mining Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Prime Mining Corp
Pair trading matchups for Prime Mining
Pair Trading with NYSE Composite and Prime Mining
The main advantage of trading using opposite NYSE Composite and Prime Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Prime Mining 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 Prime Mining will offset losses from the drop in Prime Mining's long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| Prime Mining vs. Norra Metals Corp | Prime Mining vs. ZincX Resources Corp | Prime Mining vs. Nuinsco Resources Limited | Prime Mining vs. South Star Battery |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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