Correlation Between Ioneer and FPX Nickel

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

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

Diversification Opportunities for Ioneer and FPX Nickel

0.14

Correlation Coefficient

Ioneer  FPX Nickel

Average diversification

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

Pair Corralation between Ioneer and FPX Nickel

Assuming the 90 days horizon ioneer is expected to under-perform the FPX Nickel. In addition to that, Ioneer is 2.27 times more volatile than FPX Nickel Corp. It trades about -0.05 of its total potential returns per unit of risk. FPX Nickel Corp is currently generating about -0.06 per unit of volatility. If you would invest  21.00  in FPX Nickel Corp on September 13, 2024 and sell it today you would lose (3.00) from holding FPX Nickel Corp or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

ioneer  vs.  FPX Nickel Corp

ioneer

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ioneer are ranked lower than 4 (%) 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.

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 nearly stable fundamental indicators, FPX Nickel is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ioneer and FPX Nickel

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

The idea behind ioneer and FPX Nickel Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.