Correlation Between Banyan Gold and Tristar Gold

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Can any of the company-specific risk be diversified away by investing in both Banyan Gold and Tristar 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 Tristar 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 Tristar Gold, you can compare the effects of market volatilities on Banyan Gold and Tristar 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 Tristar Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banyan Gold and Tristar Gold.

Diversification Opportunities for Banyan Gold and Tristar Gold

-0.25
  Correlation Coefficient

Very good diversification

The 3 months correlation between Banyan and Tristar is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Banyan Gold Corp and Tristar Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tristar Gold 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 Tristar Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tristar Gold has no effect on the direction of Banyan Gold i.e., Banyan Gold and Tristar Gold go up and down completely randomly.

Pair Corralation between Banyan Gold and Tristar Gold

Assuming the 90 days horizon Banyan Gold Corp is expected to generate 0.81 times more return on investment than Tristar Gold. However, Banyan Gold Corp is 1.23 times less risky than Tristar Gold. It trades about 0.08 of its potential returns per unit of risk. Tristar Gold is currently generating about 0.02 per unit of risk. If you would invest  19.00  in Banyan Gold Corp on October 24, 2024 and sell it today you would earn a total of  1.00  from holding Banyan Gold Corp or generate 5.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Banyan Gold Corp  vs.  Tristar Gold

 Performance 
       Timeline  
Banyan Gold Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Banyan Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.
Tristar Gold 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Tristar Gold are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Tristar Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Banyan Gold and Tristar Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Banyan Gold and Tristar Gold

The main advantage of trading using opposite Banyan Gold and Tristar Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banyan Gold position performs unexpectedly, Tristar 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 Tristar Gold will offset losses from the drop in Tristar Gold's long position.
The idea behind Banyan Gold Corp and Tristar Gold pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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