Correlation Between Nicola Mining and BOEING CDR

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

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

Diversification Opportunities for Nicola Mining and BOEING CDR

0.3

Correlation Coefficient

Nicola Mining  BOEING CDR

Weak diversification

The 3 months correlation between Nicola and BOEING is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nicola Mining and BOEING CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOEING CDR and Nicola Mining 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 Nicola Mining are associated (or correlated) with BOEING CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOEING CDR has no effect on the direction of Nicola Mining i.e., Nicola Mining and BOEING CDR go up and down completely randomly.

Pair Corralation between Nicola Mining and BOEING CDR

Assuming the 90 days horizon Nicola Mining is expected to generate 2.33 times more return on investment than BOEING CDR. However, Nicola Mining is 2.33 times more volatile than BOEING CDR. It trades about 0.03 of its potential returns per unit of risk. BOEING CDR is currently generating about 0.07 per unit of risk. If you would invest  31.00  in Nicola Mining on September 14, 2024 and sell it today you would earn a total of  1.00  from holding Nicola Mining or generate 3.23% return on investment over 90 days.

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

Nicola Mining  vs.  BOEING CDR

Nicola Mining

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nicola Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Nicola Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BOEING CDR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BOEING CDR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BOEING CDR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nicola Mining and BOEING CDR

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

The idea behind Nicola Mining and BOEING CDR 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.