Correlation Between Collective Mining and First National

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

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

Diversification Opportunities for Collective Mining and First National

-0.21

Correlation Coefficient

Collective Mining  First National

Very good diversification

The 3 months correlation between Collective and First is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Collective Mining and First National Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Energy and Collective Mining 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 Collective Mining are associated (or correlated) with First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Energy has no effect on the direction of Collective Mining i.e., Collective Mining and First National go up and down completely randomly.

Pair Corralation between Collective Mining and First National

Considering the 90-day investment horizon Collective Mining is expected to generate 0.24 times more return on investment than First National. However, Collective Mining is 4.21 times less risky than First National. It trades about 0.32 of its potential returns per unit of risk. First National Energy is currently generating about -0.01 per unit of risk. If you would invest  410.00  in Collective Mining on December 29, 2024 and sell it today you would earn a total of  442.00  from holding Collective Mining or generate 107.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Collective Mining  vs.  First National Energy

Collective Mining

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Collective Mining are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Collective Mining disclosed solid returns over the last few months and may actually be approaching a breakup point.

First National Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days First National Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Collective Mining and First National

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

The idea behind Collective Mining and First National Energy 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.