Correlation Between Big Ridge and St James
Can any of the company-specific risk be diversified away by investing in both Big Ridge and St James 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 St James 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 St James Gold, you can compare the effects of market volatilities on Big Ridge and St James 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 St James. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Ridge and St James.
Diversification Opportunities for Big Ridge and St James
Very weak diversification
The 3 months correlation between Big and LRDJF is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Big Ridge Gold and St James Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St James Gold 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 St James. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St James Gold has no effect on the direction of Big Ridge i.e., Big Ridge and St James go up and down completely randomly.
Pair Corralation between Big Ridge and St James
Assuming the 90 days horizon Big Ridge is expected to generate 2.33 times less return on investment than St James. But when comparing it to its historical volatility, Big Ridge Gold is 2.31 times less risky than St James. It trades about 0.03 of its potential returns per unit of risk. St James Gold is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7.44 in St James Gold on September 12, 2024 and sell it today you would lose (0.24) from holding St James Gold or give up 3.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Ridge Gold vs. St James Gold
Performance |
| Timeline |
| Big Ridge Gold |
| St James Gold |
Big Ridge and St James Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Ridge and St James
The main advantage of trading using opposite Big Ridge and St James positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Ridge position performs unexpectedly, St James 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 St James will offset losses from the drop in St James' long position.| Big Ridge vs. Revival Gold | Big Ridge vs. Galiano Gold | Big Ridge vs. US Gold Corp | Big Ridge vs. HUMANA INC |
| St James vs. Puma Exploration | St James vs. Sixty North Gold | St James vs. Red Pine Exploration | St James vs. Grande Portage Resources |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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