Correlation Between Solar Alliance and Canada Nickel
Can any of the company-specific risk be diversified away by investing in both Solar Alliance and Canada 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 Solar Alliance and Canada Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solar Alliance Energy and Canada Nickel, you can compare the effects of market volatilities on Solar Alliance and Canada 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 Solar Alliance with a short position of Canada Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar Alliance and Canada Nickel.
Diversification Opportunities for Solar Alliance and Canada Nickel
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Solar and Canada is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Solar Alliance Energy and Canada Nickel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Nickel and Solar Alliance 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 Solar Alliance Energy are associated (or correlated) with Canada Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Nickel has no effect on the direction of Solar Alliance i.e., Solar Alliance and Canada Nickel go up and down completely randomly.
Pair Corralation between Solar Alliance and Canada Nickel
Assuming the 90 days trading horizon Solar Alliance Energy is expected to generate 2.52 times more return on investment than Canada Nickel. However, Solar Alliance is 2.52 times more volatile than Canada Nickel. It trades about 0.04 of its potential returns per unit of risk. Canada Nickel is currently generating about 0.01 per unit of risk. If you would invest 4.00 in Solar Alliance Energy on September 2, 2024 and sell it today you would lose (0.50) from holding Solar Alliance Energy or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solar Alliance Energy vs. Canada Nickel
Performance |
| Timeline |
| Solar Alliance Energy |
| Canada Nickel |
Solar Alliance and Canada Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solar Alliance and Canada Nickel
The main advantage of trading using opposite Solar Alliance and Canada Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solar Alliance position performs unexpectedly, Canada 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 Canada Nickel will offset losses from the drop in Canada Nickel's long position.| Solar Alliance vs. Royal Bank of | Solar Alliance vs. Toronto Dominion Bank Pref | Solar Alliance vs. Toronto Dominion Bank | Solar Alliance vs. Amazon CDR |
| Canada Nickel vs. FPX Nickel Corp | Canada Nickel vs. Talon Metals Corp | Canada Nickel vs. Giga Metals Corp | Canada Nickel vs. American Lithium 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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