Correlation Between Golden Lake and Eskay Mining
Can any of the company-specific risk be diversified away by investing in both Golden Lake and Eskay Mining 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 Golden Lake and Eskay Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Lake Exploration and Eskay Mining Corp, you can compare the effects of market volatilities on Golden Lake and Eskay Mining 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 Golden Lake with a short position of Eskay Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Lake and Eskay Mining.
Diversification Opportunities for Golden Lake and Eskay Mining
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Golden and Eskay is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Golden Lake Exploration and Eskay Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eskay Mining Corp and Golden Lake 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 Golden Lake Exploration are associated (or correlated) with Eskay Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eskay Mining Corp has no effect on the direction of Golden Lake i.e., Golden Lake and Eskay Mining go up and down completely randomly.
Pair Corralation between Golden Lake and Eskay Mining
Assuming the 90 days horizon Golden Lake Exploration is expected to generate 2.01 times more return on investment than Eskay Mining. However, Golden Lake is 2.01 times more volatile than Eskay Mining Corp. It trades about -0.08 of its potential returns per unit of risk. Eskay Mining Corp is currently generating about -0.17 per unit of risk. If you would invest 4.73 in Golden Lake Exploration on August 29, 2024 and sell it today you would lose (1.14) from holding Golden Lake Exploration or give up 24.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Lake Exploration vs. Eskay Mining Corp
Performance |
| Timeline |
| Golden Lake Exploration |
| Eskay Mining Corp |
Golden Lake and Eskay Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Lake and Eskay Mining
The main advantage of trading using opposite Golden Lake and Eskay Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Lake position performs unexpectedly, Eskay Mining 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 Eskay Mining will offset losses from the drop in Eskay Mining's long position.The idea behind Golden Lake Exploration and Eskay Mining Corp 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.| Eskay Mining vs. Ascendant Resources | Eskay Mining vs. Cantex Mine Development | Eskay Mining vs. Amarc Resources | Eskay Mining vs. Sterling Metals 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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