Correlation Between Small Cap and NioCorp Developments
Can any of the company-specific risk be diversified away by investing in both Small Cap and NioCorp Developments 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 Small Cap and NioCorp Developments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Premium and NioCorp Developments Ltd, you can compare the effects of market volatilities on Small Cap and NioCorp Developments 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 Small Cap with a short position of NioCorp Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and NioCorp Developments.
Diversification Opportunities for Small Cap and NioCorp Developments
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Small and NioCorp is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Premium and NioCorp Developments Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NioCorp Developments and Small Cap 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 Small Cap Premium are associated (or correlated) with NioCorp Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NioCorp Developments has no effect on the direction of Small Cap i.e., Small Cap and NioCorp Developments go up and down completely randomly.
Pair Corralation between Small Cap and NioCorp Developments
Considering the 90-day investment horizon Small Cap is expected to generate 32.15 times less return on investment than NioCorp Developments. But when comparing it to its historical volatility, Small Cap Premium is 74.87 times less risky than NioCorp Developments. It trades about 0.09 of its potential returns per unit of risk. NioCorp Developments Ltd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 80.00 in NioCorp Developments Ltd on September 2, 2024 and sell it today you would earn a total of 53.00 from holding NioCorp Developments Ltd or generate 66.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Premium vs. NioCorp Developments Ltd
Performance |
| Timeline |
| Small Cap Premium |
| NioCorp Developments |
Small Cap and NioCorp Developments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and NioCorp Developments
The main advantage of trading using opposite Small Cap and NioCorp Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, NioCorp Developments 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 NioCorp Developments will offset losses from the drop in NioCorp Developments' long position.| Small Cap vs. RiverNorth Specialty Finance | Small Cap vs. Royce Micro Cap | Small Cap vs. First Trust Enhanced | Small Cap vs. Voya Global Advantage |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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