Correlation Between West Mining and Flying Nickel
Can any of the company-specific risk be diversified away by investing in both West Mining and Flying 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 West Mining and Flying Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between West Mining Corp and Flying Nickel Mining, you can compare the effects of market volatilities on West Mining and Flying 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 West Mining with a short position of Flying Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of West Mining and Flying Nickel.
Diversification Opportunities for West Mining and Flying Nickel
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between West and Flying is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding West Mining Corp and Flying Nickel Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flying Nickel Mining and West Mining 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 West Mining Corp are associated (or correlated) with Flying Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flying Nickel Mining has no effect on the direction of West Mining i.e., West Mining and Flying Nickel go up and down completely randomly.
Pair Corralation between West Mining and Flying Nickel
Assuming the 90 days horizon West Mining Corp is expected to under-perform the Flying Nickel. But the pink sheet apears to be less risky and, when comparing its historical volatility, West Mining Corp is 1.92 times less risky than Flying Nickel. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Flying Nickel Mining is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3.32 in Flying Nickel Mining on October 26, 2024 and sell it today you would lose (0.77) from holding Flying Nickel Mining or give up 23.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.31% |
| Values | Daily Returns |
West Mining Corp vs. Flying Nickel Mining
Performance |
| Timeline |
| West Mining Corp |
| Flying Nickel Mining |
West Mining and Flying Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with West Mining and Flying Nickel
The main advantage of trading using opposite West Mining and Flying Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if West Mining position performs unexpectedly, Flying 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 Flying Nickel will offset losses from the drop in Flying Nickel's long position.| West Mining vs. Atomic Minerals | West Mining vs. Mundoro Capital | West Mining vs. E79 Resources Corp | West Mining vs. Norra Metals Corp |
| Flying Nickel vs. Euro Manganese | Flying Nickel vs. Lithium Australia NL | Flying Nickel vs. Bushveld Minerals Limited | Flying Nickel vs. Core Assets 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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