Correlation Between TMC The and Northern Dynasty

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

By analyzing existing cross correlation between TMC the metals and Northern Dynasty Minerals, you can compare the effects of market volatilities on TMC The and Northern Dynasty 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 TMC The with a short position of Northern Dynasty. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMC The and Northern Dynasty.

Diversification Opportunities for TMC The and Northern Dynasty

0.25

Correlation Coefficient

TMC The  Northern Dynasty

Modest diversification

The 3 months correlation between TMC and Northern is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding TMC the metals and Northern Dynasty Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Dynasty Minerals and TMC The 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 TMC the metals are associated (or correlated) with Northern Dynasty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Dynasty Minerals has no effect on the direction of TMC The i.e., TMC The and Northern Dynasty go up and down completely randomly.

Pair Corralation between TMC The and Northern Dynasty

Considering the 90-day investment horizon TMC The is expected to generate 1.67 times less return on investment than Northern Dynasty. But when comparing it to its historical volatility, TMC the metals is 1.06 times less risky than Northern Dynasty. It trades about 0.12 of its potential returns per unit of risk. Northern Dynasty Minerals is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  57.00  in Northern Dynasty Minerals on December 28, 2024 and sell it today you would earn a total of  53.00  from holding Northern Dynasty Minerals or generate 92.98% return on investment over 90 days.

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

TMC the metals  vs.  Northern Dynasty Minerals

TMC the metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TMC the metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, TMC The exhibited solid returns over the last few months and may actually be approaching a breakup point.

Northern Dynasty Minerals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Dynasty Minerals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Northern Dynasty disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TMC The and Northern Dynasty

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

The idea behind TMC the metals and Northern Dynasty Minerals 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.