Correlation Between FPX Nickel and Ioneer

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

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

Diversification Opportunities for FPX Nickel and Ioneer

0.14

Correlation Coefficient

FPX Nickel  Ioneer

Average diversification

The 3 months correlation between FPX and Ioneer is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding FPX Nickel Corp and ioneer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ioneer and FPX 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 FPX Nickel Corp are associated (or correlated) with Ioneer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ioneer has no effect on the direction of FPX Nickel i.e., FPX Nickel and Ioneer go up and down completely randomly.

Pair Corralation between FPX Nickel and Ioneer

Assuming the 90 days horizon FPX Nickel Corp is expected to under-perform the Ioneer. But the otc stock apears to be less risky and, when comparing its historical volatility, FPX Nickel Corp is 2.18 times less risky than Ioneer. The otc stock trades about -0.05 of its potential returns per unit of risk. The ioneer is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  11.00  in ioneer on September 14, 2024 and sell it today you would earn a total of  0.00  from holding ioneer or generate 0.0% return on investment over 90 days.

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

FPX Nickel Corp  vs.  ioneer

FPX Nickel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FPX Nickel Corp 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 fundamental 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.

ioneer

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ioneer are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Ioneer reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FPX Nickel and Ioneer

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

The idea behind FPX Nickel Corp and ioneer 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.