Correlation Between Intrepid Metals and NGEx Minerals

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

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

Diversification Opportunities for Intrepid Metals and NGEx Minerals

-0.12

Correlation Coefficient

Intrepid Metals  NGEx Minerals

Good diversification

The 3 months correlation between Intrepid and NGEx is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Intrepid Metals Corp and NGEx Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGEx Minerals and Intrepid Metals 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 Intrepid Metals Corp are associated (or correlated) with NGEx Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGEx Minerals has no effect on the direction of Intrepid Metals i.e., Intrepid Metals and NGEx Minerals go up and down completely randomly.

Pair Corralation between Intrepid Metals and NGEx Minerals

Assuming the 90 days horizon Intrepid Metals Corp is expected to generate 2.3 times more return on investment than NGEx Minerals. However, Intrepid Metals is 2.3 times more volatile than NGEx Minerals. It trades about 0.08 of its potential returns per unit of risk. NGEx Minerals is currently generating about 0.03 per unit of risk. If you would invest  28.00  in Intrepid Metals Corp on December 29, 2024 and sell it today you would earn a total of  6.00  from holding Intrepid Metals Corp or generate 21.43% return on investment over 90 days.

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

Intrepid Metals Corp  vs.  NGEx Minerals

Intrepid Metals Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intrepid Metals Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Intrepid Metals reported solid returns over the last few months and may actually be approaching a breakup point.

NGEx Minerals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NGEx Minerals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NGEx Minerals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Intrepid Metals and NGEx Minerals

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

The idea behind Intrepid Metals Corp and NGEx Minerals 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.