Correlation Between Red Cat and Nicola Mining
Can any of the company-specific risk be diversified away by investing in both Red Cat 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 Red Cat and Nicola Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Cat Holdings and Nicola Mining, you can compare the effects of market volatilities on Red Cat 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 Red Cat with a short position of Nicola Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and Nicola Mining.
Diversification Opportunities for Red Cat and Nicola Mining
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Red and Nicola is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Nicola Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicola Mining and Red Cat 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 Red Cat Holdings 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 Red Cat i.e., Red Cat and Nicola Mining go up and down completely randomly.
Pair Corralation between Red Cat and Nicola Mining
Given the investment horizon of 90 days Red Cat Holdings is expected to generate 1.99 times more return on investment than Nicola Mining. However, Red Cat is 1.99 times more volatile than Nicola Mining. It trades about 0.54 of its potential returns per unit of risk. Nicola Mining is currently generating about -0.06 per unit of risk. If you would invest 317.00 in Red Cat Holdings on August 31, 2024 and sell it today you would earn a total of 610.00 from holding Red Cat Holdings or generate 192.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Cat Holdings vs. Nicola Mining
Performance |
| Timeline |
| Red Cat Holdings |
| Nicola Mining |
Red Cat and Nicola Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and Nicola Mining
The main advantage of trading using opposite Red Cat and Nicola Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat 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.| Red Cat vs. Quantum Computing | Red Cat vs. Rigetti Computing | Red Cat vs. D Wave Quantum | Red Cat vs. AstroNova |
| Nicola Mining vs. Liontown Resources Limited | Nicola Mining vs. ATT Inc | Nicola Mining vs. Merck Company | Nicola Mining vs. Walt Disney |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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