Correlation Between Native Mineral and Carlton Investments

Can any of the company-specific risk be diversified away by investing in both Native Mineral and Carlton Investments 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 Native Mineral and Carlton Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Native Mineral Resources and Carlton Investments, you can compare the effects of market volatilities on Native Mineral and Carlton Investments 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 Native Mineral with a short position of Carlton Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Native Mineral and Carlton Investments.

Diversification Opportunities for Native Mineral and Carlton Investments

0.57

Correlation Coefficient

Native Mineral  Carlton Investments

Very weak diversification

The 3 months correlation between Native and Carlton is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Native Mineral Resources and Carlton Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlton Investments and Native Mineral 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 Native Mineral Resources are associated (or correlated) with Carlton Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlton Investments has no effect on the direction of Native Mineral i.e., Native Mineral and Carlton Investments go up and down completely randomly.

Pair Corralation between Native Mineral and Carlton Investments

Assuming the 90 days trading horizon Native Mineral Resources is expected to generate 7.58 times more return on investment than Carlton Investments. However, Native Mineral is 7.58 times more volatile than Carlton Investments. It trades about 0.12 of its potential returns per unit of risk. Carlton Investments is currently generating about 0.02 per unit of risk. If you would invest  2.30  in Native Mineral Resources on September 3, 2024 and sell it today you would earn a total of  1.00  from holding Native Mineral Resources or generate 43.48% return on investment over 90 days.

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

Native Mineral Resources  vs.  Carlton Investments

Native Mineral Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Native Mineral Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Native Mineral unveiled solid returns over the last few months and may actually be approaching a breakup point.

Carlton Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carlton Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Carlton Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Native Mineral and Carlton Investments

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

The idea behind Native Mineral Resources and Carlton Investments 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.