Correlation Between Northern Dynasty and TMC The

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

By analyzing existing cross correlation between Northern Dynasty Minerals and TMC the metals, you can compare the effects of market volatilities on Northern Dynasty and TMC The 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 Northern Dynasty with a short position of TMC The. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Dynasty and TMC The.

Diversification Opportunities for Northern Dynasty and TMC The

0.78

Correlation Coefficient

Northern Dynasty  TMC The

Poor diversification

The 3 months correlation between Northern and TMC is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Northern Dynasty Minerals and TMC the metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMC the metals and Northern Dynasty 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 Northern Dynasty Minerals are associated (or correlated) with TMC The. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMC the metals has no effect on the direction of Northern Dynasty i.e., Northern Dynasty and TMC The go up and down completely randomly.

Pair Corralation between Northern Dynasty and TMC The

Considering the 90-day investment horizon Northern Dynasty is expected to generate 2.79 times less return on investment than TMC The. But when comparing it to its historical volatility, Northern Dynasty Minerals is 1.43 times less risky than TMC The. It trades about 0.12 of its potential returns per unit of risk. TMC the metals is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  74.00  in TMC the metals on December 20, 2024 and sell it today you would earn a total of  113.00  from holding TMC the metals or generate 152.7% return on investment over 90 days.

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

Northern Dynasty Minerals  vs.  TMC the metals

Northern Dynasty Minerals

Risk-Adjusted Performance

Good

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

TMC the metals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TMC the metals are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, TMC The exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Northern Dynasty and TMC The

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

The idea behind Northern Dynasty Minerals and TMC the 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.