Correlation Between Canada Nickel and Magna Mining

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

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

Diversification Opportunities for Canada Nickel and Magna Mining

-0.11

Correlation Coefficient

Canada Nickel  Magna Mining

Good diversification

The 3 months correlation between Canada and Magna is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Canada Nickel and Magna Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna 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 Magna Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna Mining has no effect on the direction of Canada Nickel i.e., Canada Nickel and Magna Mining go up and down completely randomly.

Pair Corralation between Canada Nickel and Magna Mining

Assuming the 90 days horizon Canada Nickel is expected to under-perform the Magna Mining. But the otc stock apears to be less risky and, when comparing its historical volatility, Canada Nickel is 1.59 times less risky than Magna Mining. The otc stock trades about -0.01 of its potential returns per unit of risk. The Magna Mining is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  32.00  in Magna Mining on September 4, 2024 and sell it today you would earn a total of  70.00  from holding Magna Mining or generate 218.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Canada Nickel  vs.  Magna 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. Despite nearly stable forward-looking signals, Canada Nickel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Magna Mining

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Magna Mining are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Magna Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canada Nickel and Magna Mining

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

The idea behind Canada Nickel and Magna 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.