Correlation Between Power Nickel and Magna Mining
Can any of the company-specific risk be diversified away by investing in both Power Nickel and Magna 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 Power Nickel and Magna Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Nickel and Magna Mining, you can compare the effects of market volatilities on Power Nickel and Magna 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 Power Nickel with a short position of Magna Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Nickel and Magna Mining.
Diversification Opportunities for Power Nickel and Magna Mining
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Power and Magna is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Power Nickel and Magna Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna Mining and Power Nickel 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 Power Nickel are associated (or correlated) with Magna Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna Mining has no effect on the direction of Power Nickel i.e., Power Nickel and Magna Mining go up and down completely randomly.
Pair Corralation between Power Nickel and Magna Mining
Assuming the 90 days trading horizon Power Nickel is expected to under-perform the Magna Mining. But the stock apears to be less risky and, when comparing its historical volatility, Power Nickel is 1.07 times less risky than Magna Mining. The stock trades about -0.06 of its potential returns per unit of risk. The Magna Mining is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 112.00 in Magna Mining on September 1, 2024 and sell it today you would earn a total of 34.00 from holding Magna Mining or generate 30.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Power Nickel vs. Magna Mining
Performance |
| Timeline |
| Power Nickel |
| Magna Mining |
Power Nickel and Magna Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Nickel and Magna Mining
The main advantage of trading using opposite Power Nickel and Magna Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Nickel position performs unexpectedly, Magna 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 Magna Mining will offset losses from the drop in Magna Mining's long position.| Power Nickel vs. Magna Mining | Power Nickel vs. SPC Nickel Corp | Power Nickel vs. Grid Metals Corp | Power Nickel vs. Flying Nickel Mining |
| Magna Mining vs. Kiplin Metals | Magna Mining vs. Pure Energy Minerals | Magna Mining vs. Noram Lithium Corp | Magna Mining vs. Minnova Corp |
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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