Correlation Between FPX Nickel and Faction Investment

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

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

Diversification Opportunities for FPX Nickel and Faction Investment

-0.36

Correlation Coefficient

FPX Nickel  Faction Investment

Very good diversification

The 3 months correlation between FPX and Faction is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding FPX Nickel Corp and Faction Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faction Investment and FPX 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 FPX Nickel Corp are associated (or correlated) with Faction Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faction Investment has no effect on the direction of FPX Nickel i.e., FPX Nickel and Faction Investment go up and down completely randomly.

Pair Corralation between FPX Nickel and Faction Investment

If you would invest  23.00  in FPX Nickel Corp on December 2, 2024 and sell it today you would earn a total of  1.00  from holding FPX Nickel Corp or generate 4.35% return on investment over 90 days.

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

FPX Nickel Corp  vs.  Faction Investment Group

FPX Nickel Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days FPX Nickel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, FPX Nickel is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Faction Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Faction Investment Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Faction Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FPX Nickel and Faction Investment

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

The idea behind FPX Nickel Corp and Faction Investment 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.