Correlation Between Strickland Metals and Nsx
Can any of the company-specific risk be diversified away by investing in both Strickland Metals and Nsx 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 Strickland Metals and Nsx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strickland Metals and Nsx, you can compare the effects of market volatilities on Strickland Metals and Nsx 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 Strickland Metals with a short position of Nsx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strickland Metals and Nsx.
Diversification Opportunities for Strickland Metals and Nsx
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Strickland and Nsx is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Strickland Metals and Nsx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nsx and Strickland 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 Strickland Metals are associated (or correlated) with Nsx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nsx has no effect on the direction of Strickland Metals i.e., Strickland Metals and Nsx go up and down completely randomly.
Pair Corralation between Strickland Metals and Nsx
Assuming the 90 days trading horizon Strickland Metals is expected to generate 1.8 times less return on investment than Nsx. But when comparing it to its historical volatility, Strickland Metals is 1.21 times less risky than Nsx. It trades about 0.03 of its potential returns per unit of risk. Nsx is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2.20 in Nsx on August 25, 2024 and sell it today you would earn a total of 0.40 from holding Nsx or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.48% |
| Values | Daily Returns |
Strickland Metals vs. Nsx
Performance |
| Timeline |
| Strickland Metals |
| Nsx |
Strickland Metals and Nsx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strickland Metals and Nsx
The main advantage of trading using opposite Strickland Metals and Nsx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strickland Metals position performs unexpectedly, Nsx 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 Nsx will offset losses from the drop in Nsx's long position.| Strickland Metals vs. Northern Star Resources | Strickland Metals vs. Evolution Mining | Strickland Metals vs. Bluescope Steel | Strickland Metals vs. Sandfire Resources NL |
| Nsx vs. Flagship Investments | Nsx vs. A1 Investments Resources | Nsx vs. Centaurus Metals | Nsx vs. Strickland Metals |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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