Correlation Between Nickel Creek and Advantage Solutions
Can any of the company-specific risk be diversified away by investing in both Nickel Creek and Advantage Solutions 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 Advantage Solutions 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 Advantage Solutions, you can compare the effects of market volatilities on Nickel Creek and Advantage Solutions 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 Advantage Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nickel Creek and Advantage Solutions.
Diversification Opportunities for Nickel Creek and Advantage Solutions
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nickel and Advantage is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Nickel Creek Platinum and Advantage Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Solutions 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 Advantage Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Solutions has no effect on the direction of Nickel Creek i.e., Nickel Creek and Advantage Solutions go up and down completely randomly.
Pair Corralation between Nickel Creek and Advantage Solutions
Assuming the 90 days horizon Nickel Creek is expected to generate 75.97 times less return on investment than Advantage Solutions. But when comparing it to its historical volatility, Nickel Creek Platinum is 4.13 times less risky than Advantage Solutions. It trades about 0.01 of its potential returns per unit of risk. Advantage Solutions is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2.02 in Advantage Solutions on September 10, 2024 and sell it today you would lose (0.03) from holding Advantage Solutions or give up 1.49% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 92.19% |
Values | Daily Returns |
Nickel Creek Platinum vs. Advantage Solutions
Performance |
Timeline |
Nickel Creek Platinum |
Advantage Solutions |
Nickel Creek and Advantage Solutions Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nickel Creek and Advantage Solutions
The main advantage of trading using opposite Nickel Creek and Advantage Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nickel Creek position performs unexpectedly, Advantage Solutions 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 Advantage Solutions will offset losses from the drop in Advantage Solutions' long position.Nickel Creek vs. Ridgestone Mining | Nickel Creek vs. Focus Graphite | Nickel Creek vs. Jervois Mining | Nickel Creek vs. Altius Minerals |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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