Correlation Between Big Ridge and TomaGold
Can any of the company-specific risk be diversified away by investing in both Big Ridge and TomaGold 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 TomaGold 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 TomaGold, you can compare the effects of market volatilities on Big Ridge and TomaGold 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 TomaGold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Ridge and TomaGold.
Diversification Opportunities for Big Ridge and TomaGold
Very good diversification
The 3 months correlation between Big and TomaGold is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Big Ridge Gold and TomaGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TomaGold 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 TomaGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TomaGold has no effect on the direction of Big Ridge i.e., Big Ridge and TomaGold go up and down completely randomly.
Pair Corralation between Big Ridge and TomaGold
Assuming the 90 days horizon Big Ridge is expected to generate 1.91 times less return on investment than TomaGold. But when comparing it to its historical volatility, Big Ridge Gold is 1.73 times less risky than TomaGold. It trades about 0.05 of its potential returns per unit of risk. TomaGold is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3.54 in TomaGold on September 14, 2024 and sell it today you would lose (2.44) from holding TomaGold or give up 68.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Ridge Gold vs. TomaGold
Performance |
| Timeline |
| Big Ridge Gold |
| TomaGold |
Big Ridge and TomaGold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Ridge and TomaGold
The main advantage of trading using opposite Big Ridge and TomaGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Ridge position performs unexpectedly, TomaGold 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 TomaGold will offset losses from the drop in TomaGold'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 |
| TomaGold vs. Advantage Solutions | TomaGold vs. Atlas Corp | TomaGold vs. PureCycle Technologies | TomaGold vs. WM Technology |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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