Correlation Between Big Ridge and Paramount Gold
Can any of the company-specific risk be diversified away by investing in both Big Ridge and Paramount Gold 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 Paramount Gold 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 Paramount Gold Nevada, you can compare the effects of market volatilities on Big Ridge and Paramount Gold 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 Paramount Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Ridge and Paramount Gold.
Diversification Opportunities for Big Ridge and Paramount Gold
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Big and Paramount is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Big Ridge Gold and Paramount Gold Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Gold Nevada 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 Paramount Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Gold Nevada has no effect on the direction of Big Ridge i.e., Big Ridge and Paramount Gold go up and down completely randomly.
Pair Corralation between Big Ridge and Paramount Gold
Assuming the 90 days horizon Big Ridge Gold is expected to generate 1.58 times more return on investment than Paramount Gold. However, Big Ridge is 1.58 times more volatile than Paramount Gold Nevada. It trades about 0.16 of its potential returns per unit of risk. Paramount Gold Nevada is currently generating about 0.01 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Ridge Gold vs. Paramount Gold Nevada
Performance |
| Timeline |
| Big Ridge Gold |
| Paramount Gold Nevada |
Big Ridge and Paramount Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Ridge and Paramount Gold
The main advantage of trading using opposite Big Ridge and Paramount Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Ridge position performs unexpectedly, Paramount Gold 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 Paramount Gold will offset losses from the drop in Paramount Gold's long position.| Big Ridge vs. Minnova Corp | Big Ridge vs. Argo Gold | Big Ridge vs. Advance Gold Corp | Big Ridge vs. Blue Star Gold |
| Paramount Gold vs. Vista Gold | Paramount Gold vs. International Tower Hill | Paramount Gold vs. Avino Silver Gold | Paramount Gold vs. Seabridge 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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