Correlation Between St James and Big Ridge
Can any of the company-specific risk be diversified away by investing in both St James and Big Ridge 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 St James and Big Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between St James Gold and Big Ridge Gold, you can compare the effects of market volatilities on St James and Big Ridge 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 St James with a short position of Big Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of St James and Big Ridge.
Diversification Opportunities for St James and Big Ridge
Poor diversification
The 3 months correlation between LRDJF and Big is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding St James Gold and Big Ridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Ridge Gold and St James 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 St James Gold are associated (or correlated) with Big Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Ridge Gold has no effect on the direction of St James i.e., St James and Big Ridge go up and down completely randomly.
Pair Corralation between St James and Big Ridge
Assuming the 90 days horizon St James Gold is expected to generate 1.26 times more return on investment than Big Ridge. However, St James is 1.26 times more volatile than Big Ridge Gold. It trades about 0.04 of its potential returns per unit of risk. Big Ridge Gold is currently generating about 0.05 per unit of risk. If you would invest 7.80 in St James Gold on September 5, 2024 and sell it today you would lose (0.30) from holding St James Gold or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
St James Gold vs. Big Ridge Gold
Performance |
| Timeline |
| St James Gold |
| Big Ridge Gold |
St James and Big Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with St James and Big Ridge
The main advantage of trading using opposite St James and Big Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if St James position performs unexpectedly, Big Ridge 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 Big Ridge will offset losses from the drop in Big Ridge's long position.| St James vs. Puma Exploration | St James vs. Sixty North Gold | St James vs. Red Pine Exploration | St James vs. Grande Portage Resources |
| Big Ridge vs. Harmony Gold Mining | Big Ridge vs. SPACE | Big Ridge vs. T Rowe Price | Big Ridge vs. Ampleforth |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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