Correlation Between Canadian General and Nicola Mining

Can any of the company-specific risk be diversified away by investing in both Canadian General 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 Canadian General and Nicola Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canadian General Investments and Nicola Mining, you can compare the effects of market volatilities on Canadian General 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 Canadian General with a short position of Nicola Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and Nicola Mining.

Diversification Opportunities for Canadian General and Nicola Mining

-0.72

Correlation Coefficient

Canadian General  Nicola Mining

Pay attention - limited upside

The 3 months correlation between Canadian and Nicola is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Nicola Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicola Mining and Canadian General 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 Canadian General Investments 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 Canadian General i.e., Canadian General and Nicola Mining go up and down completely randomly.

Pair Corralation between Canadian General and Nicola Mining

Assuming the 90 days trading horizon Canadian General is expected to generate 3.96 times less return on investment than Nicola Mining. But when comparing it to its historical volatility, Canadian General Investments is 6.67 times less risky than Nicola Mining. It trades about 0.06 of its potential returns per unit of risk. Nicola Mining is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Nicola Mining on September 28, 2024 and sell it today you would earn a total of  5.00  from holding Nicola Mining or generate 20.83% return on investment over 90 days.

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

Canadian General Investments  vs.  Nicola Mining

Canadian General Inv

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian General Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Canadian General is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Nicola Mining

Risk-Adjusted Performance

0 of 100

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Canadian General and Nicola Mining

The main advantage of trading using opposite Canadian General and Nicola Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian General 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 Canadian General Investments 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.