Correlation Between NioCorp Developments and Albertsons Companies

Can any of the company-specific risk be diversified away by investing in both NioCorp Developments and Albertsons Companies 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 NioCorp Developments and Albertsons Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NioCorp Developments Ltd and Albertsons Companies, you can compare the effects of market volatilities on NioCorp Developments and Albertsons Companies 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 NioCorp Developments with a short position of Albertsons Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and Albertsons Companies.

Diversification Opportunities for NioCorp Developments and Albertsons Companies

0.62

Correlation Coefficient

NioCorp Developments  Albertsons Companies

Poor diversification

The 3 months correlation between NioCorp and Albertsons is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and Albertsons Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies and NioCorp Developments 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 NioCorp Developments Ltd are associated (or correlated) with Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and Albertsons Companies go up and down completely randomly.

Pair Corralation between NioCorp Developments and Albertsons Companies

Assuming the 90 days horizon NioCorp Developments Ltd is expected to generate 10.18 times more return on investment than Albertsons Companies. However, NioCorp Developments is 10.18 times more volatile than Albertsons Companies. It trades about 0.14 of its potential returns per unit of risk. Albertsons Companies is currently generating about 0.09 per unit of risk. If you would invest  10.00  in NioCorp Developments Ltd on December 22, 2024 and sell it today you would earn a total of  10.00  from holding NioCorp Developments Ltd or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.33%
Values	Daily Returns

NioCorp Developments Ltd  vs.  Albertsons Companies

NioCorp Developments

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NioCorp Developments Ltd are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental drivers, NioCorp Developments showed solid returns over the last few months and may actually be approaching a breakup point.

Albertsons Companies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Albertsons Companies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental indicators, Albertsons Companies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with NioCorp Developments and Albertsons Companies

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

The idea behind NioCorp Developments Ltd and Albertsons Companies 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.