Correlation Between Monarca Minerals and Nouveau Monde

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

By analyzing existing cross correlation between Monarca Minerals and Nouveau Monde Graphite, you can compare the effects of market volatilities on Monarca Minerals and Nouveau Monde 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 Monarca Minerals with a short position of Nouveau Monde. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monarca Minerals and Nouveau Monde.

Diversification Opportunities for Monarca Minerals and Nouveau Monde

-0.22

Correlation Coefficient

Monarca Minerals  Nouveau Monde

Very good diversification

The 3 months correlation between Monarca and Nouveau is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Monarca Minerals and Nouveau Monde Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nouveau Monde Graphite and Monarca Minerals 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 Monarca Minerals are associated (or correlated) with Nouveau Monde. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nouveau Monde Graphite has no effect on the direction of Monarca Minerals i.e., Monarca Minerals and Nouveau Monde go up and down completely randomly.

Pair Corralation between Monarca Minerals and Nouveau Monde

Assuming the 90 days horizon Monarca Minerals is expected to under-perform the Nouveau Monde. In addition to that, Monarca Minerals is 1.58 times more volatile than Nouveau Monde Graphite. It trades about -0.22 of its total potential returns per unit of risk. Nouveau Monde Graphite is currently generating about 0.22 per unit of volatility. If you would invest  176.00  in Nouveau Monde Graphite on September 30, 2024 and sell it today you would earn a total of  53.00  from holding Nouveau Monde Graphite or generate 30.11% return on investment over 90 days.

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

Monarca Minerals  vs.  Nouveau Monde Graphite

Monarca Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monarca Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Nouveau Monde Graphite

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nouveau Monde Graphite are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nouveau Monde may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Monarca Minerals and Nouveau Monde

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

The idea behind Monarca Minerals and Nouveau Monde Graphite 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.