Correlation Between Power Metals and Graphite One
Can any of the company-specific risk be diversified away by investing in both Power Metals and Graphite One 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 Graphite One 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 Graphite One, you can compare the effects of market volatilities on Power Metals and Graphite One 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 Graphite One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Metals and Graphite One.
Diversification Opportunities for Power Metals and Graphite One
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Power and Graphite is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Power Metals Corp and Graphite One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphite One 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 Graphite One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphite One has no effect on the direction of Power Metals i.e., Power Metals and Graphite One go up and down completely randomly.
Pair Corralation between Power Metals and Graphite One
Assuming the 90 days horizon Power Metals Corp is expected to generate 1.34 times more return on investment than Graphite One. However, Power Metals is 1.34 times more volatile than Graphite One. It trades about 0.07 of its potential returns per unit of risk. Graphite One is currently generating about -0.02 per unit of risk. If you would invest 27.00 in Power Metals Corp on November 27, 2024 and sell it today you would earn a total of 68.00 from holding Power Metals Corp or generate 251.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Metals Corp vs. Graphite One
Performance |
| Timeline |
| Power Metals Corp |
| Graphite One |
Power Metals and Graphite One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Metals and Graphite One
The main advantage of trading using opposite Power Metals and Graphite One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Metals position performs unexpectedly, Graphite One 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 Graphite One will offset losses from the drop in Graphite One'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 |
| Graphite One vs. Mason Graphite | Graphite One vs. Northern Graphite | Graphite One vs. Lomiko Metals | Graphite One vs. IGO Limited |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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