Correlation Between Nickel Creek and RTG Mining

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

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

Diversification Opportunities for Nickel Creek and RTG Mining

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Correlation Coefficient

Nickel Creek  RTG Mining

Pay attention - limited upside

The 3 months correlation between Nickel and RTG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nickel Creek Platinum and RTG Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTG Mining and Nickel Creek 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 Nickel Creek Platinum are associated (or correlated) with RTG Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTG Mining has no effect on the direction of Nickel Creek i.e., Nickel Creek and RTG Mining go up and down completely randomly.

Pair Corralation between Nickel Creek and RTG Mining

Assuming the 90 days trading horizon Nickel Creek Platinum is expected to under-perform the RTG Mining. But the stock apears to be less risky and, when comparing its historical volatility, Nickel Creek Platinum is 2.42 times less risky than RTG Mining. The stock trades about -0.1 of its potential returns per unit of risk. The RTG Mining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4.00  in RTG Mining on September 2, 2024 and sell it today you would earn a total of  0.00  from holding RTG Mining or generate 0.0% return on investment over 90 days.

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

Nickel Creek Platinum  vs.  RTG Mining

Nickel Creek Platinum

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Nickel Creek Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

RTG Mining

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RTG Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, RTG Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nickel Creek and RTG Mining

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

The idea behind Nickel Creek Platinum and RTG Mining 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.