Correlation Between Leviathan Gold and Nulegacy Gold

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

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

Diversification Opportunities for Leviathan Gold and Nulegacy Gold

0.18

Correlation Coefficient

Leviathan Gold  Nulegacy Gold

Average diversification

The 3 months correlation between Leviathan and Nulegacy is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Leviathan Gold and Nulegacy Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nulegacy Gold and Leviathan 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 Leviathan Gold are associated (or correlated) with Nulegacy Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nulegacy Gold has no effect on the direction of Leviathan Gold i.e., Leviathan Gold and Nulegacy Gold go up and down completely randomly.

Pair Corralation between Leviathan Gold and Nulegacy Gold

Assuming the 90 days horizon Leviathan Gold is expected to generate 0.32 times more return on investment than Nulegacy Gold. However, Leviathan Gold is 3.1 times less risky than Nulegacy Gold. It trades about 0.04 of its potential returns per unit of risk. Nulegacy Gold is currently generating about 0.01 per unit of risk. If you would invest  5.03  in Leviathan Gold on September 13, 2024 and sell it today you would lose (0.24) from holding Leviathan Gold or give up 4.77% of portfolio value over 90 days.

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

Leviathan Gold  vs.  Nulegacy Gold

Leviathan Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Leviathan Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Leviathan Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Nulegacy Gold

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Nulegacy Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile technical and fundamental indicators, Nulegacy Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Leviathan Gold and Nulegacy Gold

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

The idea behind Leviathan Gold and Nulegacy 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.