Correlation Between Norra Metals and Niobay Metals

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

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

Diversification Opportunities for Norra Metals and Niobay Metals

0.0

Correlation Coefficient

Norra Metals  Niobay Metals

Pay attention - limited upside

The 3 months correlation between Norra and Niobay is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Norra Metals Corp and Niobay Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niobay Metals and Norra 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 Norra Metals Corp are associated (or correlated) with Niobay Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niobay Metals has no effect on the direction of Norra Metals i.e., Norra Metals and Niobay Metals go up and down completely randomly.

Pair Corralation between Norra Metals and Niobay Metals

Assuming the 90 days horizon Norra Metals Corp is expected to generate 6.21 times more return on investment than Niobay Metals. However, Norra Metals is 6.21 times more volatile than Niobay Metals. It trades about 0.07 of its potential returns per unit of risk. Niobay Metals is currently generating about 0.04 per unit of risk. If you would invest  1.60  in Norra Metals Corp on December 3, 2024 and sell it today you would lose (0.60) from holding Norra Metals Corp or give up 37.5% of portfolio value over 90 days.

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

Norra Metals Corp  vs.  Niobay Metals

Norra Metals Corp

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with Norra Metals and Niobay Metals

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

The idea behind Norra Metals Corp and Niobay 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.