Correlation Between Prospector Metals and Banyan Gold

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

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

Diversification Opportunities for Prospector Metals and Banyan Gold

0.23

Correlation Coefficient

Prospector Metals  Banyan Gold

Modest diversification

The 3 months correlation between Prospector and Banyan is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Prospector Metals Corp 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 Prospector Metals 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 Prospector Metals Corp 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 Prospector Metals i.e., Prospector Metals and Banyan Gold go up and down completely randomly.

Pair Corralation between Prospector Metals and Banyan Gold

Assuming the 90 days horizon Prospector Metals Corp is expected to generate 3.03 times more return on investment than Banyan Gold. However, Prospector Metals is 3.03 times more volatile than Banyan Gold Corp. It trades about 0.05 of its potential returns per unit of risk. Banyan Gold Corp is currently generating about 0.09 per unit of risk. If you would invest  9.00  in Prospector Metals Corp on September 5, 2024 and sell it today you would lose (1.00) from holding Prospector Metals Corp or give up 11.11% of portfolio value over 90 days.

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

Prospector Metals Corp  vs.  Banyan Gold Corp

Prospector Metals Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Prospector Metals Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Prospector Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Banyan Gold Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Banyan Gold Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Banyan Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prospector Metals and Banyan Gold

The main advantage of trading using opposite Prospector Metals and Banyan Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prospector Metals 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 Prospector Metals Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.