Correlation Between Eastfield Resources and Desert Gold
Can any of the company-specific risk be diversified away by investing in both Eastfield Resources and Desert 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 Eastfield Resources and Desert Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastfield Resources and Desert Gold Ventures, you can compare the effects of market volatilities on Eastfield Resources and Desert 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 Eastfield Resources with a short position of Desert Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastfield Resources and Desert Gold.
Diversification Opportunities for Eastfield Resources and Desert Gold
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eastfield and Desert is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Eastfield Resources and Desert Gold Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desert Gold Ventures and Eastfield Resources 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 Eastfield Resources are associated (or correlated) with Desert Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desert Gold Ventures has no effect on the direction of Eastfield Resources i.e., Eastfield Resources and Desert Gold go up and down completely randomly.
Pair Corralation between Eastfield Resources and Desert Gold
Assuming the 90 days horizon Eastfield Resources is expected to generate 1.32 times less return on investment than Desert Gold. But when comparing it to its historical volatility, Eastfield Resources is 1.01 times less risky than Desert Gold. It trades about 0.04 of its potential returns per unit of risk. Desert Gold Ventures is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Desert Gold Ventures on November 3, 2024 and sell it today you would earn a total of 2.00 from holding Desert Gold Ventures or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastfield Resources vs. Desert Gold Ventures
Performance |
| Timeline |
| Eastfield Resources |
| Desert Gold Ventures |
Eastfield Resources and Desert Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastfield Resources and Desert Gold
The main advantage of trading using opposite Eastfield Resources and Desert Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastfield Resources position performs unexpectedly, Desert 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 Desert Gold will offset losses from the drop in Desert Gold's long position.| Eastfield Resources vs. Cariboo Rose Resources | Eastfield Resources vs. Carlin Gold | Eastfield Resources vs. ExGen Resources | Eastfield Resources vs. Fjordland Exploration |
| Desert Gold vs. ExGen Resources | Desert Gold vs. Cariboo Rose Resources | Desert Gold vs. Fidelity Minerals Corp | Desert Gold vs. Goldbank Mining 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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