Correlation Between Highway 50 and Newport Exploration
Can any of the company-specific risk be diversified away by investing in both Highway 50 and Newport Exploration 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 Highway 50 and Newport Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highway 50 Gold and Newport Exploration, you can compare the effects of market volatilities on Highway 50 and Newport Exploration 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 Highway 50 with a short position of Newport Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway 50 and Newport Exploration.
Diversification Opportunities for Highway 50 and Newport Exploration
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Highway and Newport is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Highway 50 Gold and Newport Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newport Exploration and Highway 50 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 Highway 50 Gold are associated (or correlated) with Newport Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newport Exploration has no effect on the direction of Highway 50 i.e., Highway 50 and Newport Exploration go up and down completely randomly.
Pair Corralation between Highway 50 and Newport Exploration
Assuming the 90 days horizon Highway 50 Gold is expected to generate 1.56 times more return on investment than Newport Exploration. However, Highway 50 is 1.56 times more volatile than Newport Exploration. It trades about 0.03 of its potential returns per unit of risk. Newport Exploration is currently generating about -0.04 per unit of risk. If you would invest 14.00 in Highway 50 Gold on November 9, 2024 and sell it today you would lose (2.00) from holding Highway 50 Gold or give up 14.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highway 50 Gold vs. Newport Exploration
Performance |
| Timeline |
| Highway 50 Gold |
| Newport Exploration |
Highway 50 and Newport Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway 50 and Newport Exploration
The main advantage of trading using opposite Highway 50 and Newport Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway 50 position performs unexpectedly, Newport Exploration 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 Newport Exploration will offset losses from the drop in Newport Exploration's long position.| Highway 50 vs. Centerra Gold | Highway 50 vs. SSR Mining | Highway 50 vs. Alamos Gold | Highway 50 vs. Endeavour Mining Corp |
| Newport Exploration vs. McChip Resources | Newport Exploration vs. Highway 50 Gold | Newport Exploration vs. ProAm Explorations 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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