Correlation Between New Pacific and IShares Fixed

Can any of the company-specific risk be diversified away by investing in both New Pacific and IShares Fixed 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 New Pacific and IShares Fixed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between New Pacific Metals and iShares Fixed Income, you can compare the effects of market volatilities on New Pacific and IShares Fixed 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 New Pacific with a short position of IShares Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Pacific and IShares Fixed.

Diversification Opportunities for New Pacific and IShares Fixed

-0.52

Correlation Coefficient

New Pacific  IShares Fixed

Excellent diversification

The 3 months correlation between New and IShares is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding New Pacific Metals and iShares Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Fixed Income and New Pacific 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 New Pacific Metals are associated (or correlated) with IShares Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Fixed Income has no effect on the direction of New Pacific i.e., New Pacific and IShares Fixed go up and down completely randomly.

Pair Corralation between New Pacific and IShares Fixed

Given the investment horizon of 90 days New Pacific Metals is expected to generate 13.52 times more return on investment than IShares Fixed. However, New Pacific is 13.52 times more volatile than iShares Fixed Income. It trades about 0.03 of its potential returns per unit of risk. iShares Fixed Income is currently generating about 0.14 per unit of risk. If you would invest  121.00  in New Pacific Metals on October 27, 2024 and sell it today you would earn a total of  1.00  from holding New Pacific Metals or generate 0.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

New Pacific Metals  vs.  iShares Fixed Income

New Pacific Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Pacific Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

iShares Fixed Income

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Fixed Income are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, IShares Fixed is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with New Pacific and IShares Fixed

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

The idea behind New Pacific Metals and iShares Fixed Income 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.