Correlation Between Precious Metals and NGEx Minerals

Can any of the company-specific risk be diversified away by investing in both Precious 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 Precious 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 Precious Metals And and NGEx Minerals, you can compare the effects of market volatilities on Precious 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 Precious Metals with a short position of NGEx Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precious Metals and NGEx Minerals.

Diversification Opportunities for Precious Metals and NGEx Minerals

-0.28

Correlation Coefficient

Precious Metals  NGEx Minerals

Very good diversification

The 3 months correlation between Precious and NGEx is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals And and NGEx Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGEx Minerals and Precious 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 Precious Metals And 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 Precious Metals i.e., Precious Metals and NGEx Minerals go up and down completely randomly.

Pair Corralation between Precious Metals and NGEx Minerals

Assuming the 90 days trading horizon Precious Metals is expected to generate 15.56 times less return on investment than NGEx Minerals. But when comparing it to its historical volatility, Precious Metals And is 1.61 times less risky than NGEx Minerals. It trades about 0.01 of its potential returns per unit of risk. NGEx Minerals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  338.00  in NGEx Minerals on September 26, 2024 and sell it today you would earn a total of  1,046  from holding NGEx Minerals or generate 309.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Precious Metals And  vs.  NGEx Minerals

Precious Metals And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precious Metals And has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Precious Metals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

NGEx Minerals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NGEx Minerals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, NGEx Minerals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Precious Metals and NGEx Minerals

The main advantage of trading using opposite Precious Metals and NGEx Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precious 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 Precious Metals And 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.