Correlation Between First Mining and TVA

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

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

Diversification Opportunities for First Mining and TVA

-0.31

Correlation Coefficient

First Mining  TVA

Very good diversification

The 3 months correlation between First and TVA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding First Mining Gold and TVA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TVA Group and First 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 First Mining Gold are associated (or correlated) with TVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TVA Group has no effect on the direction of First Mining i.e., First Mining and TVA go up and down completely randomly.

Pair Corralation between First Mining and TVA

Assuming the 90 days horizon First Mining is expected to generate 2.59 times less return on investment than TVA. But when comparing it to its historical volatility, First Mining Gold is 1.62 times less risky than TVA. It trades about 0.02 of its potential returns per unit of risk. TVA Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  90.00  in TVA Group on December 10, 2024 and sell it today you would earn a total of  0.00  from holding TVA Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

First Mining Gold  vs.  TVA Group

First Mining Gold

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Mining Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, First Mining is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

TVA Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TVA Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, TVA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Mining and TVA

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

The idea behind First Mining Gold and TVA Group 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.