Correlation Between Paramount Gold and Big Ridge
Can any of the company-specific risk be diversified away by investing in both Paramount Gold 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 Paramount Gold and Big Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paramount Gold Nevada and Big Ridge Gold, you can compare the effects of market volatilities on Paramount Gold 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 Paramount Gold with a short position of Big Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Gold and Big Ridge.
Diversification Opportunities for Paramount Gold and Big Ridge
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Paramount and Big is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Gold Nevada 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 Paramount 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 Paramount Gold Nevada 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 Paramount Gold i.e., Paramount Gold and Big Ridge go up and down completely randomly.
Pair Corralation between Paramount Gold and Big Ridge
Considering the 90-day investment horizon Paramount Gold is expected to generate 3.55 times less return on investment than Big Ridge. But when comparing it to its historical volatility, Paramount Gold Nevada is 2.44 times less risky than Big Ridge. It trades about 0.03 of its potential returns per unit of risk. Big Ridge Gold is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Big Ridge Gold on November 2, 2024 and sell it today you would lose (3.10) from holding Big Ridge Gold or give up 34.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paramount Gold Nevada vs. Big Ridge Gold
Performance |
| Timeline |
| Paramount Gold Nevada |
| Big Ridge Gold |
Paramount Gold and Big Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paramount Gold and Big Ridge
The main advantage of trading using opposite Paramount Gold and Big Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Gold 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.| Paramount Gold vs. Vista Gold | Paramount Gold vs. International Tower Hill | Paramount Gold vs. Avino Silver Gold | Paramount Gold vs. Seabridge Gold |
| Big Ridge vs. Minnova Corp | Big Ridge vs. Argo Gold | Big Ridge vs. Advance Gold Corp | Big Ridge vs. Blue Star 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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