Correlation Between Paramount Gold and Vista Gold
Can any of the company-specific risk be diversified away by investing in both Paramount Gold and Vista 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 Paramount Gold and Vista Gold 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 Vista Gold, you can compare the effects of market volatilities on Paramount Gold and Vista 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 Paramount Gold with a short position of Vista Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Gold and Vista Gold.
Diversification Opportunities for Paramount Gold and Vista Gold
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Paramount and Vista is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Gold Nevada and Vista Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista 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 Vista Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Gold has no effect on the direction of Paramount Gold i.e., Paramount Gold and Vista Gold go up and down completely randomly.
Pair Corralation between Paramount Gold and Vista Gold
Considering the 90-day investment horizon Paramount Gold Nevada is expected to generate 1.34 times more return on investment than Vista Gold. However, Paramount Gold is 1.34 times more volatile than Vista Gold. It trades about -0.09 of its potential returns per unit of risk. Vista Gold is currently generating about -0.19 per unit of risk. If you would invest 43.00 in Paramount Gold Nevada on August 24, 2024 and sell it today you would lose (5.00) from holding Paramount Gold Nevada or give up 11.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paramount Gold Nevada vs. Vista Gold
Performance |
| Timeline |
| Paramount Gold Nevada |
| Vista Gold |
Paramount Gold and Vista Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paramount Gold and Vista Gold
The main advantage of trading using opposite Paramount Gold and Vista Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Gold position performs unexpectedly, Vista 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 Vista Gold will offset losses from the drop in Vista Gold'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 |
| Vista Gold vs. International Tower Hill | Vista Gold vs. Harmony Gold Mining | Vista Gold vs. Seabridge Gold | Vista Gold vs. IAMGold |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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