Correlation Between Banyan Gold and Liberty Gold
Can any of the company-specific risk be diversified away by investing in both Banyan Gold and Liberty 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 Banyan Gold and Liberty Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banyan Gold Corp and Liberty Gold Corp, you can compare the effects of market volatilities on Banyan Gold and Liberty 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 Banyan Gold with a short position of Liberty Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banyan Gold and Liberty Gold.
Diversification Opportunities for Banyan Gold and Liberty Gold
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Banyan and Liberty is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Banyan Gold Corp and Liberty Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Gold Corp and Banyan 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 Banyan Gold Corp are associated (or correlated) with Liberty Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Gold Corp has no effect on the direction of Banyan Gold i.e., Banyan Gold and Liberty Gold go up and down completely randomly.
Pair Corralation between Banyan Gold and Liberty Gold
Assuming the 90 days horizon Banyan Gold is expected to generate 1.32 times less return on investment than Liberty Gold. But when comparing it to its historical volatility, Banyan Gold Corp is 1.24 times less risky than Liberty Gold. It trades about 0.27 of its potential returns per unit of risk. Liberty Gold Corp is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 26.00 in Liberty Gold Corp on November 27, 2024 and sell it today you would earn a total of 7.00 from holding Liberty Gold Corp or generate 26.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banyan Gold Corp vs. Liberty Gold Corp
Performance |
| Timeline |
| Banyan Gold Corp |
| Liberty Gold Corp |
Banyan Gold and Liberty Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banyan Gold and Liberty Gold
The main advantage of trading using opposite Banyan Gold and Liberty Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banyan Gold position performs unexpectedly, Liberty 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 Liberty Gold will offset losses from the drop in Liberty Gold's long position.| Banyan Gold vs. Galway Metals | Banyan Gold vs. Rockhaven Resources | Banyan Gold vs. Cartier Resources | Banyan Gold vs. Maritime Resources Corp |
| Liberty Gold vs. GoGold Resources | Liberty Gold vs. Maple Gold Mines | Liberty Gold vs. Aurion Resources | Liberty Gold vs. Minaurum 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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