Correlation Between Terravest Capital and Nicola Mining

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

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

Diversification Opportunities for Terravest Capital and Nicola Mining

-0.29

Correlation Coefficient

Terravest Capital  Nicola Mining

Very good diversification

The 3 months correlation between Terravest and Nicola is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Terravest Capital and Nicola Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicola Mining and Terravest Capital 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 Terravest Capital are associated (or correlated) with Nicola Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicola Mining has no effect on the direction of Terravest Capital i.e., Terravest Capital and Nicola Mining go up and down completely randomly.

Pair Corralation between Terravest Capital and Nicola Mining

Assuming the 90 days trading horizon Terravest Capital is expected to generate 0.5 times more return on investment than Nicola Mining. However, Terravest Capital is 2.0 times less risky than Nicola Mining. It trades about 0.32 of its potential returns per unit of risk. Nicola Mining is currently generating about 0.1 per unit of risk. If you would invest  11,349  in Terravest Capital on October 24, 2024 and sell it today you would earn a total of  1,609  from holding Terravest Capital or generate 14.18% return on investment over 90 days.

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

Terravest Capital  vs.  Nicola Mining

Terravest Capital

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Terravest Capital are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward-looking signals, Terravest Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

Nicola Mining

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nicola Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nicola Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Terravest Capital and Nicola Mining

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

The idea behind Terravest Capital and Nicola Mining 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.