Correlation Between BTU Metals and Headwater Gold
Can any of the company-specific risk be diversified away by investing in both BTU Metals and Headwater 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 Headwater 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 Headwater Gold, you can compare the effects of market volatilities on BTU Metals and Headwater 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 Headwater Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTU Metals and Headwater Gold.
Diversification Opportunities for BTU Metals and Headwater Gold
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BTU and Headwater is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding BTU Metals Corp and Headwater Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Headwater Gold 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 Headwater Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Headwater Gold has no effect on the direction of BTU Metals i.e., BTU Metals and Headwater Gold go up and down completely randomly.
Pair Corralation between BTU Metals and Headwater Gold
Assuming the 90 days horizon BTU Metals Corp is expected to generate 0.3 times more return on investment than Headwater Gold. However, BTU Metals Corp is 3.32 times less risky than Headwater Gold. It trades about 0.21 of its potential returns per unit of risk. Headwater Gold is currently generating about -0.09 per unit of risk. If you would invest 1.91 in BTU Metals Corp on September 1, 2024 and sell it today you would earn a total of 0.14 from holding BTU Metals Corp or generate 7.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
BTU Metals Corp vs. Headwater Gold
Performance |
| Timeline |
| BTU Metals Corp |
| Headwater Gold |
BTU Metals and Headwater Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTU Metals and Headwater Gold
The main advantage of trading using opposite BTU Metals and Headwater Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTU Metals position performs unexpectedly, Headwater 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 Headwater Gold will offset losses from the drop in Headwater Gold's long position.| BTU Metals vs. Alaska Air Group | BTU Metals vs. Xtant Medical Holdings | BTU Metals vs. Westinghouse Air Brake | BTU Metals vs. AerSale Corp |
| Headwater Gold vs. Aurion Resources | Headwater Gold vs. Rio2 Limited | Headwater Gold vs. Palamina Corp | Headwater Gold vs. BTU Metals Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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