Correlation Between Power Metals and FPX Nickel
Can any of the company-specific risk be diversified away by investing in both Power Metals and FPX Nickel 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 Metals and FPX Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Metals Corp and FPX Nickel Corp, you can compare the effects of market volatilities on Power Metals and FPX Nickel 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 Metals with a short position of FPX Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Metals and FPX Nickel.
Diversification Opportunities for Power Metals and FPX Nickel
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Power and FPX is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Power Metals Corp and FPX Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPX Nickel Corp and Power Metals 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 Metals Corp are associated (or correlated) with FPX Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPX Nickel Corp has no effect on the direction of Power Metals i.e., Power Metals and FPX Nickel go up and down completely randomly.
Pair Corralation between Power Metals and FPX Nickel
Assuming the 90 days horizon Power Metals Corp is expected to generate 1.96 times more return on investment than FPX Nickel. However, Power Metals is 1.96 times more volatile than FPX Nickel Corp. It trades about 0.59 of its potential returns per unit of risk. FPX Nickel Corp is currently generating about 0.02 per unit of risk. If you would invest 32.00 in Power Metals Corp on December 1, 2024 and sell it today you would earn a total of 62.00 from holding Power Metals Corp or generate 193.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Metals Corp vs. FPX Nickel Corp
Performance |
| Timeline |
| Power Metals Corp |
| FPX Nickel Corp |
Power Metals and FPX Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Metals and FPX Nickel
The main advantage of trading using opposite Power Metals and FPX Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Metals position performs unexpectedly, FPX Nickel 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 FPX Nickel will offset losses from the drop in FPX Nickel's long position.| Power Metals vs. GoMgA Resources | Power Metals vs. Infinite Ore Corp | Power Metals vs. FPX Nickel Corp | Power Metals vs. International Lithium Corp |
| FPX Nickel vs. Oroco Resource Corp | FPX Nickel vs. Syrah Resources Limited | FPX Nickel vs. Graphite One | FPX Nickel vs. Westwater Resources |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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