Correlation Between First Mining and North Peak

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

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

Diversification Opportunities for First Mining and North Peak

0.3

Correlation Coefficient

First Mining  North Peak

Weak diversification

The 3 months correlation between First and North is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding First Mining Gold and North Peak Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Peak Resources and First Mining 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 First Mining Gold are associated (or correlated) with North Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Peak Resources has no effect on the direction of First Mining i.e., First Mining and North Peak go up and down completely randomly.

Pair Corralation between First Mining and North Peak

Assuming the 90 days horizon First Mining Gold is expected to generate 0.74 times more return on investment than North Peak. However, First Mining Gold is 1.35 times less risky than North Peak. It trades about -0.01 of its potential returns per unit of risk. North Peak Resources is currently generating about -0.05 per unit of risk. If you would invest  10.00  in First Mining Gold on September 12, 2024 and sell it today you would lose (1.10) from holding First Mining Gold or give up 11.0% of portfolio value over 90 days.

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

First Mining Gold  vs.  North Peak Resources

First Mining Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

North Peak Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with First Mining and North Peak

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

The idea behind First Mining Gold and North Peak 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.