Correlation Between Marimaca Copper and NOVARTIS

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

By analyzing existing cross correlation between Marimaca Copper Corp and NOVARTIS CAP P, you can compare the effects of market volatilities on Marimaca Copper and NOVARTIS 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 Marimaca Copper with a short position of NOVARTIS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marimaca Copper and NOVARTIS.

Diversification Opportunities for Marimaca Copper and NOVARTIS

-0.34

Correlation Coefficient

Marimaca Copper  NOVARTIS

Very good diversification

The 3 months correlation between Marimaca and NOVARTIS is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Marimaca Copper Corp and NOVARTIS CAP P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVARTIS CAP P and Marimaca Copper 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 Marimaca Copper Corp are associated (or correlated) with NOVARTIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVARTIS CAP P has no effect on the direction of Marimaca Copper i.e., Marimaca Copper and NOVARTIS go up and down completely randomly.

Pair Corralation between Marimaca Copper and NOVARTIS

Assuming the 90 days horizon Marimaca Copper Corp is expected to generate 2.63 times more return on investment than NOVARTIS. However, Marimaca Copper is 2.63 times more volatile than NOVARTIS CAP P. It trades about 0.09 of its potential returns per unit of risk. NOVARTIS CAP P is currently generating about 0.04 per unit of risk. If you would invest  348.00  in Marimaca Copper Corp on October 26, 2024 and sell it today you would earn a total of  33.00  from holding Marimaca Copper Corp or generate 9.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.87%
Values	Daily Returns

Marimaca Copper Corp  vs.  NOVARTIS CAP P

Marimaca Copper Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marimaca Copper Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Marimaca Copper reported solid returns over the last few months and may actually be approaching a breakup point.

NOVARTIS CAP P

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NOVARTIS CAP P are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NOVARTIS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Marimaca Copper and NOVARTIS

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

The idea behind Marimaca Copper Corp and NOVARTIS CAP P 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.