Correlation Between FPX Nickel and Magna Mining

Can any of the company-specific risk be diversified away by investing in both FPX Nickel and Magna Mining 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 Magna Mining 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 Magna Mining, you can compare the effects of market volatilities on FPX Nickel and Magna Mining 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 Magna Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of FPX Nickel and Magna Mining.

Diversification Opportunities for FPX Nickel and Magna Mining

-0.7

Correlation Coefficient

FPX Nickel  Magna Mining

Excellent diversification

The 3 months correlation between FPX and Magna is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding FPX Nickel Corp and Magna Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna Mining 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 Magna Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna Mining has no effect on the direction of FPX Nickel i.e., FPX Nickel and Magna Mining go up and down completely randomly.

Pair Corralation between FPX Nickel and Magna Mining

Assuming the 90 days horizon FPX Nickel Corp is expected to under-perform the Magna Mining. But the stock apears to be less risky and, when comparing its historical volatility, FPX Nickel Corp is 2.04 times less risky than Magna Mining. The stock trades about -0.12 of its potential returns per unit of risk. The Magna Mining is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  146.00  in Magna Mining on October 12, 2024 and sell it today you would earn a total of  22.00  from holding Magna Mining or generate 15.07% return on investment over 90 days.

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

FPX Nickel Corp  vs.  Magna Mining

FPX Nickel Corp

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Magna Mining

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Magna Mining are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Magna Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FPX Nickel and Magna Mining

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

The idea behind FPX Nickel Corp and Magna Mining 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.