Correlation Between Freegold Ventures and Red Moon
Can any of the company-specific risk be diversified away by investing in both Freegold Ventures and Red Moon 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 Freegold Ventures and Red Moon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freegold Ventures Limited and Red Moon Resources, you can compare the effects of market volatilities on Freegold Ventures and Red Moon 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 Freegold Ventures with a short position of Red Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freegold Ventures and Red Moon.
Diversification Opportunities for Freegold Ventures and Red Moon
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Freegold and Red is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Freegold Ventures Limited and Red Moon Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Moon Resources and Freegold Ventures 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 Freegold Ventures Limited are associated (or correlated) with Red Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Moon Resources has no effect on the direction of Freegold Ventures i.e., Freegold Ventures and Red Moon go up and down completely randomly.
Pair Corralation between Freegold Ventures and Red Moon
Assuming the 90 days horizon Freegold Ventures Limited is expected to under-perform the Red Moon. In addition to that, Freegold Ventures is 1.59 times more volatile than Red Moon Resources. It trades about -0.25 of its total potential returns per unit of risk. Red Moon Resources is currently generating about -0.22 per unit of volatility. If you would invest 49.00 in Red Moon Resources on August 26, 2024 and sell it today you would lose (5.00) from holding Red Moon Resources or give up 10.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freegold Ventures Limited vs. Red Moon Resources
Performance |
| Timeline |
| Freegold Ventures |
| Red Moon Resources |
Freegold Ventures and Red Moon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freegold Ventures and Red Moon
The main advantage of trading using opposite Freegold Ventures and Red Moon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freegold Ventures position performs unexpectedly, Red Moon 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 Red Moon will offset losses from the drop in Red Moon's long position.| Freegold Ventures vs. Mundoro Capital | Freegold Ventures vs. Norra Metals Corp | Freegold Ventures vs. E79 Resources Corp | Freegold Ventures vs. Voltage Metals Corp |
| Red Moon vs. Aurwest Resources | Red Moon vs. Benton Resources | Red Moon vs. Pan Global Resources | Red Moon vs. Tower Resources |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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