Correlation Between Falcon Gold and Gold Springs

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

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

Diversification Opportunities for Falcon Gold and Gold Springs

0.24

Correlation Coefficient

Falcon Gold  Gold Springs

Modest diversification

The 3 months correlation between Falcon and Gold is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Gold Corp and Gold Springs Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Springs Resource and Falcon 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 Falcon Gold Corp are associated (or correlated) with Gold Springs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Springs Resource has no effect on the direction of Falcon Gold i.e., Falcon Gold and Gold Springs go up and down completely randomly.

Pair Corralation between Falcon Gold and Gold Springs

Assuming the 90 days horizon Falcon Gold is expected to generate 43.45 times less return on investment than Gold Springs. In addition to that, Falcon Gold is 1.39 times more volatile than Gold Springs Resource. It trades about 0.0 of its total potential returns per unit of risk. Gold Springs Resource is currently generating about 0.02 per unit of volatility. If you would invest  7.00  in Gold Springs Resource on September 12, 2024 and sell it today you would lose (0.40) from holding Gold Springs Resource or give up 5.71% of portfolio value over 90 days.

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

Falcon Gold Corp  vs.  Gold Springs Resource

Falcon Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Falcon Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Gold Springs Resource

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Springs Resource are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gold Springs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Falcon Gold and Gold Springs

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

The idea behind Falcon Gold Corp and Gold Springs Resource 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..