Correlation Between Nicola Mining and North American

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

By analyzing existing cross correlation between Nicola Mining and North American Financial, you can compare the effects of market volatilities on Nicola Mining and North American 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 North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nicola Mining and North American.

Diversification Opportunities for Nicola Mining and North American

-0.89

Correlation Coefficient

Nicola Mining  North American

Pay attention - limited upside

The 3 months correlation between Nicola and North is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Nicola Mining and North American Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Financial 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Financial has no effect on the direction of Nicola Mining i.e., Nicola Mining and North American go up and down completely randomly.

Pair Corralation between Nicola Mining and North American

Assuming the 90 days horizon Nicola Mining is expected to under-perform the North American. In addition to that, Nicola Mining is 2.96 times more volatile than North American Financial. It trades about -0.07 of its total potential returns per unit of risk. North American Financial is currently generating about 0.32 per unit of volatility. If you would invest  551.00  in North American Financial on September 4, 2024 and sell it today you would earn a total of  181.00  from holding North American Financial or generate 32.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Nicola Mining  vs.  North American Financial

Nicola Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nicola Mining 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 fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

North American Financial

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in North American Financial are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, North American displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nicola Mining and North American

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

The idea behind Nicola Mining and North American Financial 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.