Correlation Between Nevada Copper and Imperial Metals

Can any of the company-specific risk be diversified away by investing in both Nevada Copper and Imperial Metals 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 Nevada Copper and Imperial Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nevada Copper Corp and Imperial Metals, you can compare the effects of market volatilities on Nevada Copper and Imperial Metals 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 Nevada Copper with a short position of Imperial Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nevada Copper and Imperial Metals.

Diversification Opportunities for Nevada Copper and Imperial Metals

0.2

Correlation Coefficient

Nevada Copper  Imperial Metals

Modest diversification

The 3 months correlation between Nevada and Imperial is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nevada Copper Corp and Imperial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Metals and Nevada Copper 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 Nevada Copper Corp are associated (or correlated) with Imperial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Metals has no effect on the direction of Nevada Copper i.e., Nevada Copper and Imperial Metals go up and down completely randomly.

Pair Corralation between Nevada Copper and Imperial Metals

If you would invest  152.00  in Imperial Metals on September 13, 2024 and sell it today you would earn a total of  1.00  from holding Imperial Metals or generate 0.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Nevada Copper Corp  vs.  Imperial Metals

Nevada Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Imperial Metals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Imperial Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Imperial Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nevada Copper and Imperial Metals

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

The idea behind Nevada Copper Corp and Imperial 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..