Correlation Between Strategic Resources and Nickel Creek

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

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

Diversification Opportunities for Strategic Resources and Nickel Creek

0.01

Correlation Coefficient

Strategic Resources  Nickel Creek

Significant diversification

The 3 months correlation between Strategic and Nickel is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Resources and Nickel Creek Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nickel Creek Platinum and Strategic Resources 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 Strategic Resources are associated (or correlated) with Nickel Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nickel Creek Platinum has no effect on the direction of Strategic Resources i.e., Strategic Resources and Nickel Creek go up and down completely randomly.

Pair Corralation between Strategic Resources and Nickel Creek

Assuming the 90 days horizon Strategic Resources is expected to under-perform the Nickel Creek. But the pink sheet apears to be less risky and, when comparing its historical volatility, Strategic Resources is 3.44 times less risky than Nickel Creek. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Nickel Creek Platinum is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  44.00  in Nickel Creek Platinum on December 27, 2024 and sell it today you would lose (8.00) from holding Nickel Creek Platinum or give up 18.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Strategic Resources  vs.  Nickel Creek Platinum

Strategic Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strategic Resources 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 technical and 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.

Nickel Creek Platinum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nickel Creek Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Strategic Resources and Nickel Creek

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

The idea behind Strategic Resources and Nickel Creek Platinum 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.