Correlation Between Matador Mining and Allegiant Gold

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

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

Diversification Opportunities for Matador Mining and Allegiant Gold

0.03

Correlation Coefficient

Matador Mining  Allegiant Gold

Significant diversification

The 3 months correlation between Matador and Allegiant is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Matador Mining Limited and Allegiant Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiant Gold and Matador Mining 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 Matador Mining Limited are associated (or correlated) with Allegiant Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegiant Gold has no effect on the direction of Matador Mining i.e., Matador Mining and Allegiant Gold go up and down completely randomly.

Pair Corralation between Matador Mining and Allegiant Gold

If you would invest  6.48  in Matador Mining Limited on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Matador Mining Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Matador Mining Limited  vs.  Allegiant Gold

Matador Mining

Risk-Adjusted Performance

0 of 100

Very Weak

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

Allegiant Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allegiant Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Matador Mining and Allegiant Gold

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

The idea behind Matador Mining Limited and Allegiant 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.