Correlation Between Sterling Metals and FPX Nickel
Can any of the company-specific risk be diversified away by investing in both Sterling 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 Sterling 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 Sterling Metals Corp and FPX Nickel Corp, you can compare the effects of market volatilities on Sterling 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 Sterling Metals with a short position of FPX Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Metals and FPX Nickel.
Diversification Opportunities for Sterling Metals and FPX Nickel
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sterling and FPX is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sterling 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 Sterling 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 Sterling 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 Sterling Metals i.e., Sterling Metals and FPX Nickel go up and down completely randomly.
Pair Corralation between Sterling Metals and FPX Nickel
Assuming the 90 days horizon Sterling Metals Corp is expected to generate 2.55 times more return on investment than FPX Nickel. However, Sterling Metals is 2.55 times more volatile than FPX Nickel Corp. It trades about 0.03 of its potential returns per unit of risk. FPX Nickel Corp is currently generating about -0.04 per unit of risk. If you would invest 3.40 in Sterling Metals Corp on August 25, 2024 and sell it today you would lose (0.66) from holding Sterling Metals Corp or give up 19.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Metals Corp vs. FPX Nickel Corp
Performance |
| Timeline |
| Sterling Metals Corp |
| FPX Nickel Corp |
Sterling Metals and FPX Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Metals and FPX Nickel
The main advantage of trading using opposite Sterling Metals and FPX Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling 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.| Sterling Metals vs. Norra Metals Corp | Sterling Metals vs. ZincX Resources Corp | Sterling Metals vs. Nuinsco Resources Limited | Sterling Metals vs. South Star Battery |
| FPX Nickel vs. Ascendant Resources | FPX Nickel vs. Cantex Mine Development | FPX Nickel vs. Amarc Resources | FPX Nickel vs. Sterling Metals 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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