Correlation Between Altius Minerals and Nickel Creek

Can any of the company-specific risk be diversified away by investing in both Altius Minerals and Nickel Creek 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 Altius Minerals and Nickel Creek into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altius Minerals and Nickel Creek Platinum, you can compare the effects of market volatilities on Altius Minerals and Nickel Creek 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 Altius Minerals with a short position of Nickel Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altius Minerals and Nickel Creek.

Diversification Opportunities for Altius Minerals and Nickel Creek

-0.21

Correlation Coefficient

Altius Minerals  Nickel Creek

Very good diversification

The 3 months correlation between Altius and Nickel is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Altius Minerals and Nickel Creek Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nickel Creek Platinum and Altius Minerals 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 Altius Minerals are associated (or correlated) with Nickel Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nickel Creek Platinum has no effect on the direction of Altius Minerals i.e., Altius Minerals and Nickel Creek go up and down completely randomly.

Pair Corralation between Altius Minerals and Nickel Creek

Assuming the 90 days horizon Altius Minerals is expected to generate 0.35 times more return on investment than Nickel Creek. However, Altius Minerals is 2.9 times less risky than Nickel Creek. It trades about -0.04 of its potential returns per unit of risk. Nickel Creek Platinum is currently generating about -0.02 per unit of risk. If you would invest  1,863  in Altius Minerals on December 29, 2024 and sell it today you would lose (113.00) from holding Altius Minerals or give up 6.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Altius Minerals  vs.  Nickel Creek Platinum

Altius Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Altius Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Altius Minerals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nickel Creek Platinum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nickel Creek Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Nickel Creek is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Altius Minerals and Nickel Creek

The main advantage of trading using opposite Altius Minerals and Nickel Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altius Minerals position performs unexpectedly, Nickel Creek 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 Nickel Creek will offset losses from the drop in Nickel Creek's long position.

The idea behind Altius Minerals and Nickel Creek Platinum 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.