Correlation Between Baru Gold and American Pacific
Can any of the company-specific risk be diversified away by investing in both Baru Gold and American Pacific 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 Baru Gold and American Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baru Gold Corp and American Pacific Mining, you can compare the effects of market volatilities on Baru Gold and American Pacific 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 Baru Gold with a short position of American Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baru Gold and American Pacific.
Diversification Opportunities for Baru Gold and American Pacific
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baru and American is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Baru Gold Corp and American Pacific Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Pacific Mining and Baru Gold 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 Baru Gold Corp are associated (or correlated) with American Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Pacific Mining has no effect on the direction of Baru Gold i.e., Baru Gold and American Pacific go up and down completely randomly.
Pair Corralation between Baru Gold and American Pacific
Assuming the 90 days horizon Baru Gold Corp is expected to generate 1.21 times more return on investment than American Pacific. However, Baru Gold is 1.21 times more volatile than American Pacific Mining. It trades about 0.19 of its potential returns per unit of risk. American Pacific Mining is currently generating about -0.03 per unit of risk. If you would invest 4.26 in Baru Gold Corp on November 3, 2024 and sell it today you would earn a total of 1.24 from holding Baru Gold Corp or generate 29.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Baru Gold Corp vs. American Pacific Mining
Performance |
| Timeline |
| Baru Gold Corp |
| American Pacific Mining |
Baru Gold and American Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baru Gold and American Pacific
The main advantage of trading using opposite Baru Gold and American Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baru Gold position performs unexpectedly, American Pacific 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 American Pacific will offset losses from the drop in American Pacific's long position.| Baru Gold vs. Allegiant Gold | Baru Gold vs. 1911 Gold Corp | Baru Gold vs. Altamira Gold Corp | Baru Gold vs. Gold Terra Resource |
| American Pacific vs. Westward Gold | American Pacific vs. Heliostar Metals | American Pacific vs. Revival Gold | American Pacific vs. Cabral 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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