Correlation Between Filo Mining and Norion Bank

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

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

Diversification Opportunities for Filo Mining and Norion Bank

-0.3

Correlation Coefficient

Filo Mining  Norion Bank

Very good diversification

The 3 months correlation between Filo and Norion is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Filo Mining Corp and Norion Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norion Bank and Filo 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 Filo Mining Corp are associated (or correlated) with Norion Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norion Bank has no effect on the direction of Filo Mining i.e., Filo Mining and Norion Bank go up and down completely randomly.

Pair Corralation between Filo Mining and Norion Bank

Assuming the 90 days trading horizon Filo Mining Corp is expected to generate 0.52 times more return on investment than Norion Bank. However, Filo Mining Corp is 1.94 times less risky than Norion Bank. It trades about 0.12 of its potential returns per unit of risk. Norion Bank is currently generating about 0.01 per unit of risk. If you would invest  23,400  in Filo Mining Corp on September 3, 2024 and sell it today you would earn a total of  1,900  from holding Filo Mining Corp or generate 8.12% return on investment over 90 days.

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

Filo Mining Corp  vs.  Norion Bank

Filo Mining Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Filo Mining Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Filo Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Norion Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Norion Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Norion Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Filo Mining and Norion Bank

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

The idea behind Filo Mining Corp and Norion Bank 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.