Correlation Between Niobay Metals and Sherritt International

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

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

Diversification Opportunities for Niobay Metals and Sherritt International

0.06

Correlation Coefficient

Niobay Metals  Sherritt International

Significant diversification

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

Pair Corralation between Niobay Metals and Sherritt International

Assuming the 90 days horizon Niobay Metals is expected to generate 2.4 times more return on investment than Sherritt International. However, Niobay Metals is 2.4 times more volatile than Sherritt International. It trades about 0.1 of its potential returns per unit of risk. Sherritt International is currently generating about 0.0 per unit of risk. If you would invest  3.00  in Niobay Metals on December 29, 2024 and sell it today you would earn a total of  1.00  from holding Niobay Metals or generate 33.33% return on investment over 90 days.

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

Niobay Metals  vs.  Sherritt International

Niobay Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Niobay Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Niobay Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Sherritt International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sherritt International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sherritt International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Niobay Metals and Sherritt International

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

The idea behind Niobay Metals and Sherritt International 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.