Correlation Between Dynasty Gold and Eastfield Resources

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

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

Diversification Opportunities for Dynasty Gold and Eastfield Resources

0.41

Correlation Coefficient

Dynasty Gold  Eastfield Resources

Very weak diversification

The 3 months correlation between Dynasty and Eastfield is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Dynasty Gold Corp and Eastfield Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastfield Resources and Dynasty 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 Dynasty Gold Corp are associated (or correlated) with Eastfield Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastfield Resources has no effect on the direction of Dynasty Gold i.e., Dynasty Gold and Eastfield Resources go up and down completely randomly.

Pair Corralation between Dynasty Gold and Eastfield Resources

Assuming the 90 days horizon Dynasty Gold Corp is expected to under-perform the Eastfield Resources. In addition to that, Dynasty Gold is 1.03 times more volatile than Eastfield Resources. It trades about -0.03 of its total potential returns per unit of risk. Eastfield Resources is currently generating about -0.02 per unit of volatility. If you would invest  3.00  in Eastfield Resources on September 5, 2024 and sell it today you would lose (0.50) from holding Eastfield Resources or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Dynasty Gold Corp  vs.  Eastfield Resources

Dynasty Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dynasty Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Eastfield Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastfield Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Dynasty Gold and Eastfield Resources

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

The idea behind Dynasty Gold Corp and Eastfield Resources 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.