Correlation Between Xtra Gold and TRX Gold
Can any of the company-specific risk be diversified away by investing in both Xtra Gold and TRX 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 Xtra Gold and TRX Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtra Gold Resources Corp and TRX Gold Corp, you can compare the effects of market volatilities on Xtra Gold and TRX 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 Xtra Gold with a short position of TRX Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtra Gold and TRX Gold.
Diversification Opportunities for Xtra Gold and TRX Gold
Poor diversification
The 3 months correlation between Xtra and TRX is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Xtra Gold Resources Corp and TRX Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRX Gold Corp and Xtra 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 Xtra Gold Resources Corp are associated (or correlated) with TRX Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRX Gold Corp has no effect on the direction of Xtra Gold i.e., Xtra Gold and TRX Gold go up and down completely randomly.
Pair Corralation between Xtra Gold and TRX Gold
Assuming the 90 days trading horizon Xtra Gold is expected to generate 47.61 times less return on investment than TRX Gold. But when comparing it to its historical volatility, Xtra Gold Resources Corp is 38.84 times less risky than TRX Gold. It trades about 0.08 of its potential returns per unit of risk. TRX Gold Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 44.00 in TRX Gold Corp on September 3, 2024 and sell it today you would earn a total of 4,198 from holding TRX Gold Corp or generate 9540.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Xtra Gold Resources Corp vs. TRX Gold Corp
Performance |
| Timeline |
| Xtra Gold Resources |
| TRX Gold Corp |
Xtra Gold and TRX Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtra Gold and TRX Gold
The main advantage of trading using opposite Xtra Gold and TRX Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtra Gold position performs unexpectedly, TRX 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 TRX Gold will offset losses from the drop in TRX Gold's long position.| Xtra Gold vs. Algoma Steel Group | Xtra Gold vs. Champion Iron | Xtra Gold vs. International Zeolite Corp | Xtra Gold vs. European Residential Real |
| TRX Gold vs. Algoma Steel Group | TRX Gold vs. Champion Iron | TRX Gold vs. International Zeolite Corp | TRX Gold vs. European Residential Real |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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