Correlation Between Plaza Retail and Nicola Mining

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

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

Diversification Opportunities for Plaza Retail and Nicola Mining

0.24

Correlation Coefficient

Plaza Retail  Nicola Mining

Modest diversification

The 3 months correlation between Plaza and Nicola is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Retail REIT and Nicola Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicola Mining and Plaza Retail 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 Plaza Retail REIT are associated (or correlated) with Nicola Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicola Mining has no effect on the direction of Plaza Retail i.e., Plaza Retail and Nicola Mining go up and down completely randomly.

Pair Corralation between Plaza Retail and Nicola Mining

Assuming the 90 days trading horizon Plaza Retail REIT is expected to generate 0.17 times more return on investment than Nicola Mining. However, Plaza Retail REIT is 5.79 times less risky than Nicola Mining. It trades about 0.03 of its potential returns per unit of risk. Nicola Mining is currently generating about -0.09 per unit of risk. If you would invest  367.00  in Plaza Retail REIT on September 3, 2024 and sell it today you would earn a total of  5.00  from holding Plaza Retail REIT or generate 1.36% return on investment over 90 days.

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

Plaza Retail REIT  vs.  Nicola Mining

Plaza Retail REIT

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Plaza Retail REIT are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Plaza Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 abnormal 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.

Pair Trading with Plaza Retail and Nicola Mining

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

The idea behind Plaza Retail REIT and Nicola Mining 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..