Correlation Between Big Ridge and NorthIsle Copper

Can any of the company-specific risk be diversified away by investing in both Big Ridge and NorthIsle Copper 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 Big Ridge and NorthIsle Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Big Ridge Gold and NorthIsle Copper and, you can compare the effects of market volatilities on Big Ridge and NorthIsle Copper 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 Big Ridge with a short position of NorthIsle Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Ridge and NorthIsle Copper.

Diversification Opportunities for Big Ridge and NorthIsle Copper

0.64

Correlation Coefficient

Big Ridge  NorthIsle Copper

Poor diversification

The 3 months correlation between Big and NorthIsle is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Big Ridge Gold and NorthIsle Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorthIsle Copper and Big Ridge 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 Big Ridge Gold are associated (or correlated) with NorthIsle Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorthIsle Copper has no effect on the direction of Big Ridge i.e., Big Ridge and NorthIsle Copper go up and down completely randomly.

Pair Corralation between Big Ridge and NorthIsle Copper

Assuming the 90 days trading horizon Big Ridge is expected to generate 3.58 times less return on investment than NorthIsle Copper. In addition to that, Big Ridge is 1.45 times more volatile than NorthIsle Copper and. It trades about 0.03 of its total potential returns per unit of risk. NorthIsle Copper and is currently generating about 0.14 per unit of volatility. If you would invest  42.00  in NorthIsle Copper and on October 22, 2024 and sell it today you would earn a total of  4.00  from holding NorthIsle Copper and or generate 9.52% return on investment over 90 days.

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

Big Ridge Gold  vs.  NorthIsle Copper and

Big Ridge Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Big Ridge Gold 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

NorthIsle Copper

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NorthIsle Copper and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, NorthIsle Copper may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Big Ridge and NorthIsle Copper

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

The idea behind Big Ridge Gold and NorthIsle Copper and 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.