Correlation Between NioCorp Developments and Black Hills

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

By analyzing existing cross correlation between NioCorp Developments Ltd and Black Hills, you can compare the effects of market volatilities on NioCorp Developments and Black Hills 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 NioCorp Developments with a short position of Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and Black Hills.

Diversification Opportunities for NioCorp Developments and Black Hills

-0.52

Correlation Coefficient

NioCorp Developments  Black Hills

Excellent diversification

The 3 months correlation between NioCorp and Black is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills and NioCorp Developments 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 NioCorp Developments Ltd are associated (or correlated) with Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and Black Hills go up and down completely randomly.

Pair Corralation between NioCorp Developments and Black Hills

Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to under-perform the Black Hills. In addition to that, NioCorp Developments is 4.08 times more volatile than Black Hills. It trades about -0.07 of its total potential returns per unit of risk. Black Hills is currently generating about 0.1 per unit of volatility. If you would invest  5,855  in Black Hills on September 3, 2024 and sell it today you would earn a total of  426.00  from holding Black Hills or generate 7.28% return on investment over 90 days.

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

NioCorp Developments Ltd  vs.  Black Hills

NioCorp Developments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NioCorp Developments Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Black Hills

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Black Hills are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward-looking signals, Black Hills may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NioCorp Developments and Black Hills

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

The idea behind NioCorp Developments Ltd and Black Hills 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.