Correlation Between Max Resource and P2 Gold
Can any of the company-specific risk be diversified away by investing in both Max Resource and P2 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 Max Resource and P2 Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Max Resource Corp and P2 Gold, you can compare the effects of market volatilities on Max Resource and P2 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 Max Resource with a short position of P2 Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Max Resource and P2 Gold.
Diversification Opportunities for Max Resource and P2 Gold
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Max and PGLDF is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Max Resource Corp and P2 Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on P2 Gold and Max Resource 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 Max Resource Corp are associated (or correlated) with P2 Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of P2 Gold has no effect on the direction of Max Resource i.e., Max Resource and P2 Gold go up and down completely randomly.
Pair Corralation between Max Resource and P2 Gold
Assuming the 90 days horizon Max Resource Corp is expected to generate 1.02 times more return on investment than P2 Gold. However, Max Resource is 1.02 times more volatile than P2 Gold. It trades about 0.22 of its potential returns per unit of risk. P2 Gold is currently generating about 0.14 per unit of risk. If you would invest 3.00 in Max Resource Corp on November 3, 2024 and sell it today you would earn a total of 1.00 from holding Max Resource Corp or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Max Resource Corp vs. P2 Gold
Performance |
| Timeline |
| Max Resource Corp |
| P2 Gold |
Max Resource and P2 Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Max Resource and P2 Gold
The main advantage of trading using opposite Max Resource and P2 Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Max Resource position performs unexpectedly, P2 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 P2 Gold will offset losses from the drop in P2 Gold's long position.| Max Resource vs. Western Alaska Minerals | Max Resource vs. P2 Gold | Max Resource vs. CMC Metals | Max Resource vs. GoGold Resources |
| P2 Gold vs. Max Resource Corp | P2 Gold vs. Western Alaska Minerals | P2 Gold vs. CMC Metals | P2 Gold vs. Summa Silver 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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