Correlation Between Patagonia Gold and ADF
Can any of the company-specific risk be diversified away by investing in both Patagonia Gold and ADF 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 Patagonia Gold and ADF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Patagonia Gold Corp and ADF Group, you can compare the effects of market volatilities on Patagonia Gold and ADF 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 Patagonia Gold with a short position of ADF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patagonia Gold and ADF.
Diversification Opportunities for Patagonia Gold and ADF
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Patagonia and ADF is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Patagonia Gold Corp and ADF Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADF Group and Patagonia Gold 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 Patagonia Gold Corp are associated (or correlated) with ADF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADF Group has no effect on the direction of Patagonia Gold i.e., Patagonia Gold and ADF go up and down completely randomly.
Pair Corralation between Patagonia Gold and ADF
Assuming the 90 days trading horizon Patagonia Gold Corp is expected to generate 3.64 times more return on investment than ADF. However, Patagonia Gold is 3.64 times more volatile than ADF Group. It trades about 0.11 of its potential returns per unit of risk. ADF Group is currently generating about -0.08 per unit of risk. If you would invest 2.00 in Patagonia Gold Corp on November 3, 2024 and sell it today you would earn a total of 2.50 from holding Patagonia Gold Corp or generate 125.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Patagonia Gold Corp vs. ADF Group
Performance |
| Timeline |
| Patagonia Gold Corp |
| ADF Group |
Patagonia Gold and ADF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patagonia Gold and ADF
The main advantage of trading using opposite Patagonia Gold and ADF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patagonia Gold position performs unexpectedly, ADF 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 ADF will offset losses from the drop in ADF's long position.| Patagonia Gold vs. Rover Metals Corp | Patagonia Gold vs. Southern Empire Resources | Patagonia Gold vs. Sarama Resource | Patagonia Gold vs. Awale Resources |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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