Correlation Between Canada Nickel and Flying Nickel

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

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

Diversification Opportunities for Canada Nickel and Flying Nickel

0.39

Correlation Coefficient

Canada Nickel  Flying Nickel

Weak diversification

The 3 months correlation between Canada and Flying is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Canada Nickel 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 Canada Nickel 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 Canada Nickel 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 Canada Nickel i.e., Canada Nickel and Flying Nickel go up and down completely randomly.

Pair Corralation between Canada Nickel and Flying Nickel

Assuming the 90 days horizon Canada Nickel is expected to generate 2.07 times less return on investment than Flying Nickel. But when comparing it to its historical volatility, Canada Nickel is 2.52 times less risky than Flying Nickel. It trades about 0.01 of its potential returns per unit of risk. Flying Nickel Mining is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Flying Nickel Mining on October 11, 2024 and sell it today you would lose (6.00) from holding Flying Nickel Mining or give up 60.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.3%
Values	Daily Returns

Canada Nickel  vs.  Flying Nickel Mining

Canada Nickel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canada Nickel 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.

Flying Nickel Mining

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Canada Nickel and Flying Nickel

The main advantage of trading using opposite Canada Nickel and Flying Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canada Nickel 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.

The idea behind Canada Nickel and Flying Nickel 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.