Correlation Between Dakota Gold and Seabridge Gold

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

By analyzing existing cross correlation between Dakota Gold Corp and Seabridge Gold, you can compare the effects of market volatilities on Dakota Gold and Seabridge 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 Dakota Gold with a short position of Seabridge Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dakota Gold and Seabridge Gold.

Diversification Opportunities for Dakota Gold and Seabridge Gold

0.67

Correlation Coefficient

Dakota Gold  Seabridge Gold

Poor diversification

The 3 months correlation between Dakota and Seabridge is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dakota Gold Corp and Seabridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seabridge Gold and Dakota 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 Dakota Gold Corp are associated (or correlated) with Seabridge Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seabridge Gold has no effect on the direction of Dakota Gold i.e., Dakota Gold and Seabridge Gold go up and down completely randomly.

Pair Corralation between Dakota Gold and Seabridge Gold

Allowing for the 90-day total investment horizon Dakota Gold Corp is expected to under-perform the Seabridge Gold. In addition to that, Dakota Gold is 1.21 times more volatile than Seabridge Gold. It trades about 0.0 of its total potential returns per unit of risk. Seabridge Gold is currently generating about 0.03 per unit of volatility. If you would invest  1,205  in Seabridge Gold on September 12, 2024 and sell it today you would earn a total of  201.00  from holding Seabridge Gold or generate 16.68% return on investment over 90 days.

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

Dakota Gold Corp  vs.  Seabridge Gold

Dakota Gold Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dakota Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Dakota Gold is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Seabridge Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seabridge Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dakota Gold and Seabridge Gold

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

The idea behind Dakota Gold Corp and Seabridge Gold 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..