Correlation Between Red Pine and Xtra Gold
Can any of the company-specific risk be diversified away by investing in both Red Pine and Xtra 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 Xtra 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 Xtra Gold Resources Corp, you can compare the effects of market volatilities on Red Pine and Xtra 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 Xtra Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Pine and Xtra Gold.
Diversification Opportunities for Red Pine and Xtra Gold
Good diversification
The 3 months correlation between Red and Xtra is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Red Pine Exploration and Xtra Gold Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtra Gold Resources 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 Xtra Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtra Gold Resources has no effect on the direction of Red Pine i.e., Red Pine and Xtra Gold go up and down completely randomly.
Pair Corralation between Red Pine and Xtra Gold
Assuming the 90 days horizon Red Pine Exploration is expected to under-perform the Xtra Gold. In addition to that, Red Pine is 1.42 times more volatile than Xtra Gold Resources Corp. It trades about -0.11 of its total potential returns per unit of risk. Xtra Gold Resources Corp is currently generating about 0.38 per unit of volatility. If you would invest 160.00 in Xtra Gold Resources Corp on September 13, 2024 and sell it today you would earn a total of 30.00 from holding Xtra Gold Resources Corp or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Pine Exploration vs. Xtra Gold Resources Corp
Performance |
| Timeline |
| Red Pine Exploration |
| Xtra Gold Resources |
Red Pine and Xtra Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Pine and Xtra Gold
The main advantage of trading using opposite Red Pine and Xtra Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Pine position performs unexpectedly, Xtra 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 Xtra Gold will offset losses from the drop in Xtra Gold's long position.| Red Pine vs. Honey Badger Silver | Red Pine vs. Inventus Mining Corp | Red Pine vs. CANEX Metals | Red Pine vs. Ressources Minieres Radisson |
| Xtra Gold vs. Loncor Resources | Xtra Gold vs. Century Global Commodities | Xtra Gold vs. Grosvenor Resource Corp | Xtra Gold vs. Quartz Mountain 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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