Correlation Between Canada Nickel and Vertical Exploration

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

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

Diversification Opportunities for Canada Nickel and Vertical Exploration

0.0

Correlation Coefficient

Canada Nickel  Vertical Exploration

Pay attention - limited upside

The 3 months correlation between Canada and Vertical is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Canada Nickel and Vertical Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertical Exploration 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 Vertical Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertical Exploration has no effect on the direction of Canada Nickel i.e., Canada Nickel and Vertical Exploration go up and down completely randomly.

Pair Corralation between Canada Nickel and Vertical Exploration

Assuming the 90 days horizon Canada Nickel is expected to generate 36.72 times more return on investment than Vertical Exploration. However, Canada Nickel is 36.72 times more volatile than Vertical Exploration. It trades about 0.06 of its potential returns per unit of risk. Vertical Exploration is currently generating about 0.12 per unit of risk. If you would invest  63.00  in Canada Nickel on December 30, 2024 and sell it today you would earn a total of  7.00  from holding Canada Nickel or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Canada Nickel  vs.  Vertical Exploration

Canada Nickel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canada Nickel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Canada Nickel reported solid returns over the last few months and may actually be approaching a breakup point.

Vertical Exploration

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vertical Exploration are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Vertical Exploration is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Canada Nickel and Vertical Exploration

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

The idea behind Canada Nickel and Vertical Exploration 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.