Correlation Between Red Moon and Nevada King
Can any of the company-specific risk be diversified away by investing in both Red Moon and Nevada King 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 Moon and Nevada King into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Moon Resources and Nevada King Gold, you can compare the effects of market volatilities on Red Moon and Nevada King 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 Moon with a short position of Nevada King. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Moon and Nevada King.
Diversification Opportunities for Red Moon and Nevada King
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Red and Nevada is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Red Moon Resources and Nevada King Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nevada King Gold and Red Moon 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 Moon Resources are associated (or correlated) with Nevada King. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nevada King Gold has no effect on the direction of Red Moon i.e., Red Moon and Nevada King go up and down completely randomly.
Pair Corralation between Red Moon and Nevada King
Assuming the 90 days horizon Red Moon is expected to generate 4.26 times less return on investment than Nevada King. But when comparing it to its historical volatility, Red Moon Resources is 2.01 times less risky than Nevada King. It trades about 0.03 of its potential returns per unit of risk. Nevada King Gold is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Nevada King Gold on October 26, 2024 and sell it today you would earn a total of 2.00 from holding Nevada King Gold or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.5% |
| Values | Daily Returns |
Red Moon Resources vs. Nevada King Gold
Performance |
| Timeline |
| Red Moon Resources |
| Nevada King Gold |
Red Moon and Nevada King Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Moon and Nevada King
The main advantage of trading using opposite Red Moon and Nevada King positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Moon position performs unexpectedly, Nevada King 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 Nevada King will offset losses from the drop in Nevada King's long position.| Red Moon vs. Aurwest Resources | Red Moon vs. Benton Resources | Red Moon vs. Pan Global Resources | Red Moon vs. Tower Resources |
| Nevada King vs. Group Ten Metals | Nevada King vs. Ascendant Resources | Nevada King vs. Atico Mining | Nevada King vs. Prime Mining 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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