Correlation Between Precision Drilling and Nicola Mining
Can any of the company-specific risk be diversified away by investing in both Precision Drilling and Nicola 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 Precision Drilling and Nicola Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precision Drilling and Nicola Mining, you can compare the effects of market volatilities on Precision Drilling and Nicola 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 Precision Drilling with a short position of Nicola Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precision Drilling and Nicola Mining.
Diversification Opportunities for Precision Drilling and Nicola Mining
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Precision and Nicola is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and Nicola Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicola Mining and Precision Drilling 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 Precision Drilling are associated (or correlated) with Nicola Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicola Mining has no effect on the direction of Precision Drilling i.e., Precision Drilling and Nicola Mining go up and down completely randomly.
Pair Corralation between Precision Drilling and Nicola Mining
Assuming the 90 days horizon Precision Drilling is expected to generate 0.83 times more return on investment than Nicola Mining. However, Precision Drilling is 1.21 times less risky than Nicola Mining. It trades about 0.19 of its potential returns per unit of risk. Nicola Mining is currently generating about -0.19 per unit of risk. If you would invest 7,950 in Precision Drilling on August 30, 2024 and sell it today you would earn a total of 811.00 from holding Precision Drilling or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precision Drilling vs. Nicola Mining
Performance |
| Timeline |
| Precision Drilling |
| Nicola Mining |
Precision Drilling and Nicola Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precision Drilling and Nicola Mining
The main advantage of trading using opposite Precision Drilling and Nicola Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Drilling position performs unexpectedly, Nicola 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 Nicola Mining will offset losses from the drop in Nicola Mining's long position.| Precision Drilling vs. Trican Well Service | Precision Drilling vs. Ensign Energy Services | Precision Drilling vs. Calfrac Well Services | Precision Drilling vs. Birchcliff Energy |
| Nicola Mining vs. Kingsmen Resources | Nicola Mining vs. Gunpoint Exploration | Nicola Mining vs. Themac Resources Group | Nicola Mining vs. Magna Terra Minerals |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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