Correlation Between Bear Creek and International Tower

Can any of the company-specific risk be diversified away by investing in both Bear Creek and International Tower 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 Bear Creek and International Tower into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bear Creek Mining and International Tower Hill, you can compare the effects of market volatilities on Bear Creek and International Tower 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 Bear Creek with a short position of International Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bear Creek and International Tower.

Diversification Opportunities for Bear Creek and International Tower

0.7

Correlation Coefficient

Bear Creek  International Tower

Poor diversification

The 3 months correlation between Bear and International is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bear Creek Mining and International Tower Hill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Tower Hill and Bear Creek 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 Bear Creek Mining are associated (or correlated) with International Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Tower Hill has no effect on the direction of Bear Creek i.e., Bear Creek and International Tower go up and down completely randomly.

Pair Corralation between Bear Creek and International Tower

Assuming the 90 days horizon Bear Creek Mining is expected to generate 1.33 times more return on investment than International Tower. However, Bear Creek is 1.33 times more volatile than International Tower Hill. It trades about 0.08 of its potential returns per unit of risk. International Tower Hill is currently generating about 0.05 per unit of risk. If you would invest  27.00  in Bear Creek Mining on September 13, 2024 and sell it today you would earn a total of  6.00  from holding Bear Creek Mining or generate 22.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Bear Creek Mining  vs.  International Tower Hill

Bear Creek Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bear Creek Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Bear Creek reported solid returns over the last few months and may actually be approaching a breakup point.

International Tower Hill

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in International Tower Hill are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical indicators, International Tower displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bear Creek and International Tower

The main advantage of trading using opposite Bear Creek and International Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bear Creek position performs unexpectedly, International Tower 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 International Tower will offset losses from the drop in International Tower's long position.

The idea behind Bear Creek Mining and International Tower Hill pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.