Correlation Between Guardian and Tarku Resources

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

By analyzing existing cross correlation between Guardian i3 Global and Tarku Resources, you can compare the effects of market volatilities on Guardian and Tarku 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 Guardian with a short position of Tarku Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardian and Tarku Resources.

Diversification Opportunities for Guardian and Tarku Resources

-0.68

Correlation Coefficient

Guardian  Tarku Resources

Excellent diversification

The 3 months correlation between Guardian and Tarku is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Guardian i3 Global and Tarku Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarku Resources and Guardian 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 Guardian i3 Global are associated (or correlated) with Tarku Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarku Resources has no effect on the direction of Guardian i.e., Guardian and Tarku Resources go up and down completely randomly.

Pair Corralation between Guardian and Tarku Resources

Assuming the 90 days trading horizon Guardian is expected to generate 2.81 times less return on investment than Tarku Resources. But when comparing it to its historical volatility, Guardian i3 Global is 17.24 times less risky than Tarku Resources. It trades about 0.16 of its potential returns per unit of risk. Tarku Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1.50  in Tarku Resources on September 13, 2024 and sell it today you would lose (0.50) from holding Tarku Resources or give up 33.33% of portfolio value over 90 days.

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

Guardian i3 Global  vs.  Tarku Resources

Guardian i3 Global

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian i3 Global are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Guardian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tarku Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tarku Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Tarku Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guardian and Tarku Resources

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

The idea behind Guardian i3 Global and Tarku 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.