Correlation Between Teck Resources and NioCorp Developments
Can any of the company-specific risk be diversified away by investing in both Teck Resources 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 Teck Resources and NioCorp Developments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teck Resources Ltd and NioCorp Developments Ltd, you can compare the effects of market volatilities on Teck Resources 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 Teck Resources with a short position of NioCorp Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teck Resources and NioCorp Developments.
Diversification Opportunities for Teck Resources and NioCorp Developments
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Teck and NioCorp is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Teck Resources Ltd and NioCorp Developments Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NioCorp Developments and Teck Resources 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 Teck Resources Ltd 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 Teck Resources i.e., Teck Resources and NioCorp Developments go up and down completely randomly.
Pair Corralation between Teck Resources and NioCorp Developments
Given the investment horizon of 90 days Teck Resources Ltd is expected to generate 0.45 times more return on investment than NioCorp Developments. However, Teck Resources Ltd is 2.24 times less risky than NioCorp Developments. It trades about 0.05 of its potential returns per unit of risk. NioCorp Developments Ltd is currently generating about -0.05 per unit of risk. If you would invest 3,681 in Teck Resources Ltd on August 29, 2024 and sell it today you would earn a total of 949.00 from holding Teck Resources Ltd or generate 25.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teck Resources Ltd vs. NioCorp Developments Ltd
Performance |
| Timeline |
| Teck Resources |
| NioCorp Developments |
Teck Resources and NioCorp Developments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teck Resources and NioCorp Developments
The main advantage of trading using opposite Teck Resources and NioCorp Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teck Resources 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.| Teck Resources vs. Rio Tinto ADR | Teck Resources vs. Vale SA ADR | Teck Resources vs. MP Materials Corp | Teck Resources vs. Lithium Americas Corp |
| NioCorp Developments vs. Lithium Americas Corp | NioCorp Developments vs. Caterpillar | NioCorp Developments vs. Exxon Mobil Corp | NioCorp Developments vs. Cisco Systems |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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