Correlation Between NioCorp Developments and First Mining

Can any of the company-specific risk be diversified away by investing in both NioCorp Developments and First Mining 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 First Mining 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 First Mining Gold, you can compare the effects of market volatilities on NioCorp Developments and First Mining 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 First Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and First Mining.

Diversification Opportunities for NioCorp Developments and First Mining

0.45

Correlation Coefficient

NioCorp Developments  First Mining

Very weak diversification

The 3 months correlation between NioCorp and First is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and First Mining Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mining Gold 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 First Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mining Gold has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and First Mining go up and down completely randomly.

Pair Corralation between NioCorp Developments and First Mining

Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to generate 7.99 times more return on investment than First Mining. However, NioCorp Developments is 7.99 times more volatile than First Mining Gold. It trades about 0.04 of its potential returns per unit of risk. First Mining Gold is currently generating about 0.0 per unit of risk. If you would invest  80.00  in NioCorp Developments Ltd on September 3, 2024 and sell it today you would earn a total of  53.00  from holding NioCorp Developments Ltd or generate 66.25% return on investment over 90 days.

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

NioCorp Developments Ltd  vs.  First Mining Gold

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.

First Mining Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Mining Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, First Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NioCorp Developments and First Mining

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

The idea behind NioCorp Developments Ltd and First Mining Gold 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.