Correlation Between Millbank Mining and Sun Peak

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

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

Diversification Opportunities for Millbank Mining and Sun Peak

0.48

Correlation Coefficient

Millbank Mining  Sun Peak

Very weak diversification

The 3 months correlation between Millbank and Sun is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Millbank Mining Corp and Sun Peak Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Peak Metals and Millbank 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 Millbank Mining Corp are associated (or correlated) with Sun Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Peak Metals has no effect on the direction of Millbank Mining i.e., Millbank Mining and Sun Peak go up and down completely randomly.

Pair Corralation between Millbank Mining and Sun Peak

Assuming the 90 days trading horizon Millbank Mining Corp is expected to generate 0.46 times more return on investment than Sun Peak. However, Millbank Mining Corp is 2.18 times less risky than Sun Peak. It trades about 0.07 of its potential returns per unit of risk. Sun Peak Metals is currently generating about 0.03 per unit of risk. If you would invest  47.00  in Millbank Mining Corp on October 25, 2024 and sell it today you would earn a total of  1.00  from holding Millbank Mining Corp or generate 2.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	65.0%
Values	Daily Returns

Millbank Mining Corp  vs.  Sun Peak Metals

Millbank Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Millbank Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Millbank Mining is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sun Peak Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Peak Metals 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.

Pair Trading with Millbank Mining and Sun Peak

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

The idea behind Millbank Mining Corp and Sun Peak Metals 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.