Correlation Between Big Ridge and Bluestone Resources
Can any of the company-specific risk be diversified away by investing in both Big Ridge and Bluestone Resources 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 Big Ridge and Bluestone Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Ridge Gold and Bluestone Resources, you can compare the effects of market volatilities on Big Ridge and Bluestone Resources 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 Big Ridge with a short position of Bluestone Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Ridge and Bluestone Resources.
Diversification Opportunities for Big Ridge and Bluestone Resources
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Big and Bluestone is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Big Ridge Gold and Bluestone Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluestone Resources and Big Ridge 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 Big Ridge Gold are associated (or correlated) with Bluestone Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluestone Resources has no effect on the direction of Big Ridge i.e., Big Ridge and Bluestone Resources go up and down completely randomly.
Pair Corralation between Big Ridge and Bluestone Resources
Assuming the 90 days horizon Big Ridge Gold is expected to generate 1.34 times more return on investment than Bluestone Resources. However, Big Ridge is 1.34 times more volatile than Bluestone Resources. It trades about 0.16 of its potential returns per unit of risk. Bluestone Resources is currently generating about 0.03 per unit of risk. If you would invest 4.00 in Big Ridge Gold on August 31, 2024 and sell it today you would earn a total of 3.00 from holding Big Ridge Gold or generate 75.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Ridge Gold vs. Bluestone Resources
Performance |
| Timeline |
| Big Ridge Gold |
| Bluestone Resources |
Big Ridge and Bluestone Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Ridge and Bluestone Resources
The main advantage of trading using opposite Big Ridge and Bluestone Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Ridge position performs unexpectedly, Bluestone Resources 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 Bluestone Resources will offset losses from the drop in Bluestone Resources' long position.| Big Ridge vs. Minnova Corp | Big Ridge vs. Argo Gold | Big Ridge vs. Advance Gold Corp | Big Ridge vs. Blue Star Gold |
| Bluestone Resources vs. Minnova Corp | Bluestone Resources vs. Argo Gold | Bluestone Resources vs. Advance Gold Corp | Bluestone Resources vs. Blue Star Gold |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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