Correlation Between Pacific Bay and Richmond Minerals
Can any of the company-specific risk be diversified away by investing in both Pacific Bay and Richmond Minerals 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 Pacific Bay and Richmond Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Bay Minerals and Richmond Minerals, you can compare the effects of market volatilities on Pacific Bay and Richmond Minerals 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 Pacific Bay with a short position of Richmond Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Bay and Richmond Minerals.
Diversification Opportunities for Pacific Bay and Richmond Minerals
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pacific and Richmond is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Bay Minerals and Richmond Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richmond Minerals and Pacific Bay 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 Pacific Bay Minerals are associated (or correlated) with Richmond Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richmond Minerals has no effect on the direction of Pacific Bay i.e., Pacific Bay and Richmond Minerals go up and down completely randomly.
Pair Corralation between Pacific Bay and Richmond Minerals
Assuming the 90 days horizon Pacific Bay is expected to generate 1.23 times less return on investment than Richmond Minerals. But when comparing it to its historical volatility, Pacific Bay Minerals is 1.61 times less risky than Richmond Minerals. It trades about 0.08 of its potential returns per unit of risk. Richmond Minerals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Richmond Minerals on September 1, 2024 and sell it today you would lose (1.00) from holding Richmond Minerals or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific Bay Minerals vs. Richmond Minerals
Performance |
| Timeline |
| Pacific Bay Minerals |
| Richmond Minerals |
Pacific Bay and Richmond Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Bay and Richmond Minerals
The main advantage of trading using opposite Pacific Bay and Richmond Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Bay position performs unexpectedly, Richmond Minerals 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 Richmond Minerals will offset losses from the drop in Richmond Minerals' long position.| Pacific Bay vs. AKITA Drilling | Pacific Bay vs. Pollard Banknote Limited | Pacific Bay vs. North American Financial | Pacific Bay vs. First National Financial |
| Richmond Minerals vs. Gatos Silver | Richmond Minerals vs. MAG Silver Corp | Richmond Minerals vs. Fairfax Financial Holdings | Richmond Minerals vs. Income Financial Trust |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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