Correlation Between Intrepid Metals and Premium Nickel

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

Diversification Opportunities for Intrepid Metals and Premium Nickel

-0.18

Correlation Coefficient

Intrepid Metals  Premium Nickel

Good diversification

The 3 months correlation between Intrepid and Premium is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Intrepid Metals Corp and Premium Nickel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Nickel Resources 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 Premium Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Nickel Resources has no effect on the direction of Intrepid Metals i.e., Intrepid Metals and Premium Nickel go up and down completely randomly.

Pair Corralation between Intrepid Metals and Premium Nickel

Assuming the 90 days horizon Intrepid Metals Corp is expected to generate 1.02 times more return on investment than Premium Nickel. However, Intrepid Metals is 1.02 times more volatile than Premium Nickel Resources. It trades about -0.01 of its potential returns per unit of risk. Premium Nickel Resources is currently generating about -0.08 per unit of risk. If you would invest  31.00  in Intrepid Metals Corp on September 3, 2024 and sell it today you would lose (4.00) from holding Intrepid Metals Corp or give up 12.9% of portfolio value over 90 days.

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

Intrepid Metals Corp  vs.  Premium Nickel Resources

Intrepid Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intrepid Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Intrepid Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Premium Nickel Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premium Nickel Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Intrepid Metals and Premium Nickel

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

The idea behind Intrepid Metals Corp and Premium Nickel Resources 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 Transaction History module to view history of all your transactions and understand their impact on performance.