Correlation Between Red Pine and Sitka Gold
Can any of the company-specific risk be diversified away by investing in both Red Pine and Sitka 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 Red Pine and Sitka Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Pine Exploration and Sitka Gold Corp, you can compare the effects of market volatilities on Red Pine and Sitka 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 Red Pine with a short position of Sitka Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Pine and Sitka Gold.
Diversification Opportunities for Red Pine and Sitka Gold
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Red and Sitka is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Red Pine Exploration and Sitka Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitka Gold Corp and Red Pine 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 Red Pine Exploration are associated (or correlated) with Sitka Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitka Gold Corp has no effect on the direction of Red Pine i.e., Red Pine and Sitka Gold go up and down completely randomly.
Pair Corralation between Red Pine and Sitka Gold
Assuming the 90 days horizon Red Pine is expected to generate 5.08 times less return on investment than Sitka Gold. In addition to that, Red Pine is 1.04 times more volatile than Sitka Gold Corp. It trades about 0.01 of its total potential returns per unit of risk. Sitka Gold Corp is currently generating about 0.07 per unit of volatility. If you would invest 8.34 in Sitka Gold Corp on September 3, 2024 and sell it today you would earn a total of 23.66 from holding Sitka Gold Corp or generate 283.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Pine Exploration vs. Sitka Gold Corp
Performance |
| Timeline |
| Red Pine Exploration |
| Sitka Gold Corp |
Red Pine and Sitka Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Pine and Sitka Gold
The main advantage of trading using opposite Red Pine and Sitka Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Pine position performs unexpectedly, Sitka 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 Sitka Gold will offset losses from the drop in Sitka Gold's long position.| Red Pine vs. Endurance Gold | Red Pine vs. Altamira Gold Corp | Red Pine vs. Grande Portage Resources | Red Pine vs. Tectonic Metals |
| Sitka Gold vs. Aurion Resources | Sitka Gold vs. Minera Alamos | Sitka Gold vs. Rio2 Limited | Sitka Gold vs. Roscan Gold Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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