Correlation Between Magna Mining and Nobel Resources

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

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

Diversification Opportunities for Magna Mining and Nobel Resources

-0.06

Correlation Coefficient

Magna Mining  Nobel Resources

Good diversification

The 3 months correlation between Magna and Nobel is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Magna Mining and Nobel Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nobel Resources Corp and Magna Mining 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 Magna Mining are associated (or correlated) with Nobel Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nobel Resources Corp has no effect on the direction of Magna Mining i.e., Magna Mining and Nobel Resources go up and down completely randomly.

Pair Corralation between Magna Mining and Nobel Resources

Assuming the 90 days horizon Magna Mining is expected to generate 2.48 times more return on investment than Nobel Resources. However, Magna Mining is 2.48 times more volatile than Nobel Resources Corp. It trades about 0.11 of its potential returns per unit of risk. Nobel Resources Corp is currently generating about 0.13 per unit of risk. If you would invest  95.00  in Magna Mining on December 28, 2024 and sell it today you would earn a total of  24.00  from holding Magna Mining or generate 25.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Magna Mining  vs.  Nobel Resources Corp

Magna Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magna Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Magna Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Nobel Resources Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nobel Resources Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nobel Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magna Mining and Nobel Resources

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

The idea behind Magna Mining and Nobel Resources Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.