Correlation Between Nouveau Monde and Trilogy Metals

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

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

Diversification Opportunities for Nouveau Monde and Trilogy Metals

-0.48

Correlation Coefficient

Nouveau Monde  Trilogy Metals

Very good diversification

The 3 months correlation between Nouveau and Trilogy is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Nouveau Monde Graphite and Trilogy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trilogy Metals and Nouveau Monde 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 Nouveau Monde Graphite are associated (or correlated) with Trilogy Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trilogy Metals has no effect on the direction of Nouveau Monde i.e., Nouveau Monde and Trilogy Metals go up and down completely randomly.

Pair Corralation between Nouveau Monde and Trilogy Metals

Considering the 90-day investment horizon Nouveau Monde is expected to generate 7.01 times less return on investment than Trilogy Metals. In addition to that, Nouveau Monde is 1.02 times more volatile than Trilogy Metals. It trades about 0.02 of its total potential returns per unit of risk. Trilogy Metals is currently generating about 0.13 per unit of volatility. If you would invest  114.00  in Trilogy Metals on December 28, 2024 and sell it today you would earn a total of  48.00  from holding Trilogy Metals or generate 42.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nouveau Monde Graphite  vs.  Trilogy Metals

Nouveau Monde Graphite

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nouveau Monde Graphite are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Nouveau Monde may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Trilogy Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trilogy Metals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Trilogy Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nouveau Monde and Trilogy Metals

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

The idea behind Nouveau Monde Graphite and Trilogy 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.