Correlation Between BTU Metals and Clarity Gold
Can any of the company-specific risk be diversified away by investing in both BTU Metals and Clarity 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 BTU Metals and Clarity Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTU Metals Corp and Clarity Gold Corp, you can compare the effects of market volatilities on BTU Metals and Clarity 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 BTU Metals with a short position of Clarity Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTU Metals and Clarity Gold.
Diversification Opportunities for BTU Metals and Clarity Gold
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BTU and Clarity is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding BTU Metals Corp and Clarity Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarity Gold Corp and BTU Metals 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 BTU Metals Corp are associated (or correlated) with Clarity Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarity Gold Corp has no effect on the direction of BTU Metals i.e., BTU Metals and Clarity Gold go up and down completely randomly.
Pair Corralation between BTU Metals and Clarity Gold
Assuming the 90 days horizon BTU Metals is expected to generate 1.93 times less return on investment than Clarity Gold. But when comparing it to its historical volatility, BTU Metals Corp is 1.17 times less risky than Clarity Gold. It trades about 0.02 of its potential returns per unit of risk. Clarity Gold Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3.80 in Clarity Gold Corp on September 3, 2024 and sell it today you would lose (0.80) from holding Clarity Gold Corp or give up 21.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
BTU Metals Corp vs. Clarity Gold Corp
Performance |
| Timeline |
| BTU Metals Corp |
| Clarity Gold Corp |
BTU Metals and Clarity Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTU Metals and Clarity Gold
The main advantage of trading using opposite BTU Metals and Clarity Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTU Metals position performs unexpectedly, Clarity 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 Clarity Gold will offset losses from the drop in Clarity Gold's long position.| BTU Metals vs. Harmony Gold Mining | BTU Metals vs. SPACE | BTU Metals vs. T Rowe Price | BTU Metals vs. Ampleforth |
| Clarity Gold vs. Harmony Gold Mining | Clarity Gold vs. SPACE | Clarity Gold vs. T Rowe Price | Clarity Gold vs. Ampleforth |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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