Correlation Between Excellon Resources and TRX Gold
Can any of the company-specific risk be diversified away by investing in both Excellon Resources and TRX 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 Excellon Resources and TRX Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Excellon Resources and TRX Gold Corp, you can compare the effects of market volatilities on Excellon Resources and TRX 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 Excellon Resources with a short position of TRX Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excellon Resources and TRX Gold.
Diversification Opportunities for Excellon Resources and TRX Gold
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Excellon and TRX is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Excellon Resources and TRX Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRX Gold Corp and Excellon 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 Excellon Resources are associated (or correlated) with TRX Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRX Gold Corp has no effect on the direction of Excellon Resources i.e., Excellon Resources and TRX Gold go up and down completely randomly.
Pair Corralation between Excellon Resources and TRX Gold
Assuming the 90 days trading horizon Excellon Resources is expected to under-perform the TRX Gold. In addition to that, Excellon Resources is 6.85 times more volatile than TRX Gold Corp. It trades about -0.17 of its total potential returns per unit of risk. TRX Gold Corp is currently generating about 0.44 per unit of volatility. If you would invest 4,199 in TRX Gold Corp on October 9, 2024 and sell it today you would earn a total of 376.00 from holding TRX Gold Corp or generate 8.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Excellon Resources vs. TRX Gold Corp
Performance |
| Timeline |
| Excellon Resources |
| TRX Gold Corp |
Excellon Resources and TRX Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Excellon Resources and TRX Gold
The main advantage of trading using opposite Excellon Resources and TRX Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excellon Resources position performs unexpectedly, TRX 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 TRX Gold will offset losses from the drop in TRX Gold's long position.| Excellon Resources vs. Minco Silver | Excellon Resources vs. Americas Silver Corp | Excellon Resources vs. IMPACT Silver Corp | Excellon Resources vs. Dolly Varden Silver |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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