Correlation Between New Pacific and Paramount Gold
Can any of the company-specific risk be diversified away by investing in both New Pacific and Paramount 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 New Pacific and Paramount Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Pacific Metals and Paramount Gold Nevada, you can compare the effects of market volatilities on New Pacific and Paramount 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 New Pacific with a short position of Paramount Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Pacific and Paramount Gold.
Diversification Opportunities for New Pacific and Paramount Gold
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Paramount is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding New Pacific Metals and Paramount Gold Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Gold Nevada and New Pacific 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 New Pacific Metals are associated (or correlated) with Paramount Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Gold Nevada has no effect on the direction of New Pacific i.e., New Pacific and Paramount Gold go up and down completely randomly.
Pair Corralation between New Pacific and Paramount Gold
Given the investment horizon of 90 days New Pacific is expected to generate 10.27 times less return on investment than Paramount Gold. In addition to that, New Pacific is 1.12 times more volatile than Paramount Gold Nevada. It trades about 0.0 of its total potential returns per unit of risk. Paramount Gold Nevada is currently generating about 0.02 per unit of volatility. If you would invest 37.00 in Paramount Gold Nevada on August 30, 2024 and sell it today you would earn a total of 3.30 from holding Paramount Gold Nevada or generate 8.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
New Pacific Metals vs. Paramount Gold Nevada
Performance |
| Timeline |
| New Pacific Metals |
| Paramount Gold Nevada |
New Pacific and Paramount Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Pacific and Paramount Gold
The main advantage of trading using opposite New Pacific and Paramount Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Pacific position performs unexpectedly, Paramount 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 Paramount Gold will offset losses from the drop in Paramount Gold's long position.| New Pacific vs. Endeavour Silver Corp | New Pacific vs. Metalla Royalty Streaming | New Pacific vs. Hecla Mining | New Pacific vs. Gatos Silver |
| Paramount Gold vs. Vista Gold | Paramount Gold vs. International Tower Hill | Paramount Gold vs. Avino Silver Gold | Paramount Gold vs. Seabridge Gold |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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