Correlation Between Québec Nickel and Canadian Palladium

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

By analyzing existing cross correlation between Qubec Nickel Corp and Canadian Palladium Resources, you can compare the effects of market volatilities on Québec Nickel and Canadian Palladium 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 Québec Nickel with a short position of Canadian Palladium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Québec Nickel and Canadian Palladium.

Diversification Opportunities for Québec Nickel and Canadian Palladium

0.1

Correlation Coefficient

Québec Nickel  Canadian Palladium

Average diversification

The 3 months correlation between Québec and Canadian is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Qubec Nickel Corp and Canadian Palladium Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Palladium and Québec Nickel 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 Qubec Nickel Corp are associated (or correlated) with Canadian Palladium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Palladium has no effect on the direction of Québec Nickel i.e., Québec Nickel and Canadian Palladium go up and down completely randomly.

Pair Corralation between Québec Nickel and Canadian Palladium

Assuming the 90 days horizon Qubec Nickel Corp is expected to under-perform the Canadian Palladium. In addition to that, Québec Nickel is 1.71 times more volatile than Canadian Palladium Resources. It trades about -0.02 of its total potential returns per unit of risk. Canadian Palladium Resources is currently generating about 0.0 per unit of volatility. If you would invest  7.04  in Canadian Palladium Resources on December 29, 2024 and sell it today you would lose (2.19) from holding Canadian Palladium Resources or give up 31.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Qubec Nickel Corp  vs.  Canadian Palladium Resources

Qubec Nickel Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qubec Nickel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Canadian Palladium

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Québec Nickel and Canadian Palladium

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

The idea behind Qubec Nickel Corp and Canadian Palladium Resources 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.