Correlation Between Nickel Creek and New Age

Can any of the company-specific risk be diversified away by investing in both Nickel Creek and New Age 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 New Age 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 New Age Metals, you can compare the effects of market volatilities on Nickel Creek and New Age 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 New Age. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nickel Creek and New Age.

Diversification Opportunities for Nickel Creek and New Age

-0.06

Correlation Coefficient

Nickel Creek  New Age

Good diversification

The 3 months correlation between Nickel and New is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Nickel Creek Platinum and New Age Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Age Metals 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 New Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Age Metals has no effect on the direction of Nickel Creek i.e., Nickel Creek and New Age go up and down completely randomly.

Pair Corralation between Nickel Creek and New Age

Assuming the 90 days horizon Nickel Creek Platinum is expected to under-perform the New Age. But the otc stock apears to be less risky and, when comparing its historical volatility, Nickel Creek Platinum is 1.9 times less risky than New Age. The otc stock trades about -0.13 of its potential returns per unit of risk. The New Age Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6.68  in New Age Metals on September 14, 2024 and sell it today you would lose (0.83) from holding New Age Metals or give up 12.43% of portfolio value over 90 days.

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

Nickel Creek Platinum  vs.  New Age Metals

Nickel Creek Platinum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nickel Creek Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

New Age Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New Age Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, New Age reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nickel Creek and New Age

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

The idea behind Nickel Creek Platinum and New Age Metals 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.