Correlation Between Dynacor Gold and Banyan Gold

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

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

Diversification Opportunities for Dynacor Gold and Banyan Gold

-0.1

Correlation Coefficient

Dynacor Gold  Banyan Gold

Good diversification

The 3 months correlation between Dynacor and Banyan is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dynacor Gold Mines and Banyan Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banyan Gold Corp and Dynacor 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 Dynacor Gold Mines are associated (or correlated) with Banyan Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banyan Gold Corp has no effect on the direction of Dynacor Gold i.e., Dynacor Gold and Banyan Gold go up and down completely randomly.

Pair Corralation between Dynacor Gold and Banyan Gold

Assuming the 90 days horizon Dynacor Gold Mines is expected to generate 0.43 times more return on investment than Banyan Gold. However, Dynacor Gold Mines is 2.31 times less risky than Banyan Gold. It trades about 0.1 of its potential returns per unit of risk. Banyan Gold Corp is currently generating about -0.05 per unit of risk. If you would invest  380.00  in Dynacor Gold Mines on September 15, 2024 and sell it today you would earn a total of  47.00  from holding Dynacor Gold Mines or generate 12.37% return on investment over 90 days.

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

Dynacor Gold Mines  vs.  Banyan Gold Corp

Dynacor Gold Mines

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dynacor Gold Mines are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Dynacor Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Banyan Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banyan Gold Corp 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Dynacor Gold and Banyan Gold

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

The idea behind Dynacor Gold Mines and Banyan Gold Corp 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.