Correlation Between Magna Mining and Banyan Gold

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

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

Diversification Opportunities for Magna Mining and Banyan Gold

-0.44

Correlation Coefficient

Magna Mining  Banyan Gold

Very good diversification

The 3 months correlation between Magna and Banyan is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Magna Mining and Banyan Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banyan Gold Corp and Magna 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 Magna Mining are associated (or correlated) with Banyan Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banyan Gold Corp has no effect on the direction of Magna Mining i.e., Magna Mining and Banyan Gold go up and down completely randomly.

Pair Corralation between Magna Mining and Banyan Gold

Assuming the 90 days trading horizon Magna Mining is expected to generate 1.06 times more return on investment than Banyan Gold. However, Magna Mining is 1.06 times more volatile than Banyan Gold Corp. It trades about 0.06 of its potential returns per unit of risk. Banyan Gold Corp is currently generating about -0.05 per unit of risk. If you would invest  127.00  in Magna Mining on September 26, 2024 and sell it today you would earn a total of  13.00  from holding Magna Mining or generate 10.24% return on investment over 90 days.

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

Magna Mining  vs.  Banyan Gold Corp

Magna Mining

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Magna Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Magna Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Banyan Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banyan Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Magna Mining and Banyan Gold

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

The idea behind Magna Mining and Banyan Gold Corp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.