Correlation Between NGEx Minerals and Silver Spruce

Can any of the company-specific risk be diversified away by investing in both NGEx Minerals and Silver Spruce 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 NGEx Minerals and Silver Spruce into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NGEx Minerals and Silver Spruce Resources, you can compare the effects of market volatilities on NGEx Minerals and Silver Spruce 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 NGEx Minerals with a short position of Silver Spruce. Check out your portfolio center. Please also check ongoing floating volatility patterns of NGEx Minerals and Silver Spruce.

Diversification Opportunities for NGEx Minerals and Silver Spruce

0.56

Correlation Coefficient

NGEx Minerals  Silver Spruce

Very weak diversification

The 3 months correlation between NGEx and Silver is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding NGEx Minerals and Silver Spruce Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Spruce Resources and NGEx Minerals 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 NGEx Minerals are associated (or correlated) with Silver Spruce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Spruce Resources has no effect on the direction of NGEx Minerals i.e., NGEx Minerals and Silver Spruce go up and down completely randomly.

Pair Corralation between NGEx Minerals and Silver Spruce

Assuming the 90 days horizon NGEx Minerals is expected to generate 0.22 times more return on investment than Silver Spruce. However, NGEx Minerals is 4.58 times less risky than Silver Spruce. It trades about 0.14 of its potential returns per unit of risk. Silver Spruce Resources is currently generating about 0.02 per unit of risk. If you would invest  664.00  in NGEx Minerals on February 21, 2024 and sell it today you would earn a total of  56.00  from holding NGEx Minerals or generate 8.43% return on investment over 90 days.

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

NGEx Minerals  vs.  Silver Spruce Resources

NGEx Minerals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NGEx Minerals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NGEx Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Silver Spruce Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Spruce Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Silver Spruce reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NGEx Minerals and Silver Spruce

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

The idea behind NGEx Minerals and Silver Spruce Resources 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.