Correlation Between Thor Explorations and Highway 50
Can any of the company-specific risk be diversified away by investing in both Thor Explorations and Highway 50 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 Thor Explorations and Highway 50 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Explorations and Highway 50 Gold, you can compare the effects of market volatilities on Thor Explorations and Highway 50 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 Thor Explorations with a short position of Highway 50. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Explorations and Highway 50.
Diversification Opportunities for Thor Explorations and Highway 50
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Thor and Highway is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Thor Explorations and Highway 50 Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway 50 Gold and Thor Explorations 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 Thor Explorations are associated (or correlated) with Highway 50. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highway 50 Gold has no effect on the direction of Thor Explorations i.e., Thor Explorations and Highway 50 go up and down completely randomly.
Pair Corralation between Thor Explorations and Highway 50
Assuming the 90 days horizon Thor Explorations is expected to generate 3.6 times less return on investment than Highway 50. But when comparing it to its historical volatility, Thor Explorations is 1.88 times less risky than Highway 50. It trades about 0.04 of its potential returns per unit of risk. Highway 50 Gold is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Highway 50 Gold on August 25, 2024 and sell it today you would earn a total of 10.00 from holding Highway 50 Gold or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thor Explorations vs. Highway 50 Gold
Performance |
| Timeline |
| Thor Explorations |
| Highway 50 Gold |
Thor Explorations and Highway 50 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thor Explorations and Highway 50
The main advantage of trading using opposite Thor Explorations and Highway 50 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Explorations position performs unexpectedly, Highway 50 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 Highway 50 will offset losses from the drop in Highway 50's long position.| Thor Explorations vs. First Majestic Silver | Thor Explorations vs. Ivanhoe Energy | Thor Explorations vs. Orezone Gold Corp | Thor Explorations vs. Faraday Copper Corp |
| Highway 50 vs. First Majestic Silver | Highway 50 vs. Ivanhoe Energy | Highway 50 vs. Orezone Gold Corp | Highway 50 vs. Faraday Copper 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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