Correlation Between Torex Gold and New Gold
Can any of the company-specific risk be diversified away by investing in both Torex Gold and New 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 Torex Gold and New Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Torex Gold Resources and New Gold, you can compare the effects of market volatilities on Torex Gold and New 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 Torex Gold with a short position of New Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Torex Gold and New Gold.
Diversification Opportunities for Torex Gold and New Gold
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Torex and New is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Torex Gold Resources and New Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Gold and Torex 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 Torex Gold Resources are associated (or correlated) with New Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Gold has no effect on the direction of Torex Gold i.e., Torex Gold and New Gold go up and down completely randomly.
Pair Corralation between Torex Gold and New Gold
Assuming the 90 days trading horizon Torex Gold Resources is expected to generate 1.01 times more return on investment than New Gold. However, Torex Gold is 1.01 times more volatile than New Gold. It trades about -0.04 of its potential returns per unit of risk. New Gold is currently generating about -0.05 per unit of risk. If you would invest 2,972 in Torex Gold Resources on August 29, 2024 and sell it today you would lose (109.00) from holding Torex Gold Resources or give up 3.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Torex Gold Resources vs. New Gold
Performance |
| Timeline |
| Torex Gold Resources |
| New Gold |
Torex Gold and New Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Torex Gold and New Gold
The main advantage of trading using opposite Torex Gold and New Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Torex Gold position performs unexpectedly, New 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 New Gold will offset losses from the drop in New Gold's long position.| Torex Gold vs. OceanaGold | Torex Gold vs. Wesdome Gold Mines | Torex Gold vs. Centerra Gold | Torex Gold vs. Alamos Gold |
| New Gold vs. IAMGold | New Gold vs. Eldorado Gold Corp | New Gold vs. Alamos Gold | New Gold vs. NovaGold 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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