Correlation Between Eagle Plains and Radius Gold

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

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

Diversification Opportunities for Eagle Plains and Radius Gold

0.16

Correlation Coefficient

Eagle Plains  Radius Gold

Average diversification

The 3 months correlation between Eagle and Radius is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Plains Resources and Radius Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radius Gold and Eagle Plains 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 Eagle Plains Resources are associated (or correlated) with Radius Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radius Gold has no effect on the direction of Eagle Plains i.e., Eagle Plains and Radius Gold go up and down completely randomly.

Pair Corralation between Eagle Plains and Radius Gold

Assuming the 90 days horizon Eagle Plains is expected to generate 2.05 times less return on investment than Radius Gold. But when comparing it to its historical volatility, Eagle Plains Resources is 1.21 times less risky than Radius Gold. It trades about 0.05 of its potential returns per unit of risk. Radius Gold is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Radius Gold on September 22, 2024 and sell it today you would earn a total of  0.00  from holding Radius Gold or generate 0.0% return on investment over 90 days.

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

Eagle Plains Resources  vs.  Radius Gold

Eagle Plains Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Plains Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Eagle Plains reported solid returns over the last few months and may actually be approaching a breakup point.

Radius Gold

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Eagle Plains and Radius Gold

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

The idea behind Eagle Plains Resources and Radius 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.

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.