Correlation Between Canada Nickel and Nobel Resources

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

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

Diversification Opportunities for Canada Nickel and Nobel Resources

0.68

Correlation Coefficient

Canada Nickel  Nobel Resources

Poor diversification

The 3 months correlation between Canada and Nobel is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Canada Nickel and Nobel Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nobel Resources Corp 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 Nobel Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nobel Resources Corp has no effect on the direction of Canada Nickel i.e., Canada Nickel and Nobel Resources go up and down completely randomly.

Pair Corralation between Canada Nickel and Nobel Resources

Assuming the 90 days horizon Canada Nickel is expected to under-perform the Nobel Resources. In addition to that, Canada Nickel is 1.94 times more volatile than Nobel Resources Corp. It trades about -0.07 of its total potential returns per unit of risk. Nobel Resources Corp is currently generating about -0.12 per unit of volatility. If you would invest  2.52  in Nobel Resources Corp on December 1, 2024 and sell it today you would lose (0.30) from holding Nobel Resources Corp or give up 11.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.75%
Values	Daily Returns

Canada Nickel  vs.  Nobel Resources Corp

Canada Nickel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canada Nickel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Nobel Resources Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nobel Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Canada Nickel and Nobel Resources

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

The idea behind Canada Nickel and Nobel Resources Corp 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.