Correlation Between Giga Metals and Canada Nickel

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

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

Diversification Opportunities for Giga Metals and Canada Nickel

0.34

Correlation Coefficient

Giga Metals  Canada Nickel

Weak diversification

The 3 months correlation between Giga and Canada is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Giga Metals Corp and Canada Nickel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Nickel and Giga Metals 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 Giga Metals Corp are associated (or correlated) with Canada Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Nickel has no effect on the direction of Giga Metals i.e., Giga Metals and Canada Nickel go up and down completely randomly.

Pair Corralation between Giga Metals and Canada Nickel

Assuming the 90 days trading horizon Giga Metals Corp is expected to under-perform the Canada Nickel. In addition to that, Giga Metals is 2.85 times more volatile than Canada Nickel. It trades about -0.24 of its total potential returns per unit of risk. Canada Nickel is currently generating about -0.33 per unit of volatility. If you would invest  74.00  in Canada Nickel on September 12, 2024 and sell it today you would lose (9.00) from holding Canada Nickel or give up 12.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.3%
Values	Daily Returns

Giga Metals Corp  vs.  Canada Nickel

Giga Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Giga Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Canada Nickel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canada Nickel 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 forward-looking signals 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 Giga Metals and Canada Nickel

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

The idea behind Giga Metals Corp and Canada Nickel 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.