Correlation Between T2 Metals and Nicola Mining

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Can any of the company-specific risk be diversified away by investing in both T2 Metals and Nicola Mining 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 T2 Metals and Nicola Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T2 Metals Corp and Nicola Mining, you can compare the effects of market volatilities on T2 Metals and Nicola Mining 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 T2 Metals with a short position of Nicola Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of T2 Metals and Nicola Mining.

Diversification Opportunities for T2 Metals and Nicola Mining

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between TWO and Nicola is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding T2 Metals Corp and Nicola Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicola Mining and T2 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 T2 Metals Corp are associated (or correlated) with Nicola Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicola Mining has no effect on the direction of T2 Metals i.e., T2 Metals and Nicola Mining go up and down completely randomly.

Pair Corralation between T2 Metals and Nicola Mining

Assuming the 90 days horizon T2 Metals Corp is expected to generate 1.68 times more return on investment than Nicola Mining. However, T2 Metals is 1.68 times more volatile than Nicola Mining. It trades about 0.08 of its potential returns per unit of risk. Nicola Mining is currently generating about 0.05 per unit of risk. If you would invest  13.00  in T2 Metals Corp on August 24, 2024 and sell it today you would earn a total of  15.00  from holding T2 Metals Corp or generate 115.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

T2 Metals Corp  vs.  Nicola Mining

 Performance 
       Timeline  
T2 Metals Corp 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days T2 Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, T2 Metals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Nicola Mining 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Nicola Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

T2 Metals and Nicola Mining Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with T2 Metals and Nicola Mining

The main advantage of trading using opposite T2 Metals and Nicola Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T2 Metals position performs unexpectedly, Nicola Mining 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 Nicola Mining will offset losses from the drop in Nicola Mining's long position.
The idea behind T2 Metals Corp and Nicola Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 CEOs Directory module to screen CEOs from public companies around the world.

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