Correlation Between Radius Gold and Argonaut Gold

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

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

Diversification Opportunities for Radius Gold and Argonaut Gold

0.1

Correlation Coefficient

Radius Gold  Argonaut Gold

Average diversification

The 3 months correlation between Radius and Argonaut is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Radius Gold and Argonaut Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argonaut Gold and Radius 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 Radius Gold are associated (or correlated) with Argonaut Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argonaut Gold has no effect on the direction of Radius Gold i.e., Radius Gold and Argonaut Gold go up and down completely randomly.

Pair Corralation between Radius Gold and Argonaut Gold

Assuming the 90 days horizon Radius Gold is expected to generate 3.05 times more return on investment than Argonaut Gold. However, Radius Gold is 3.05 times more volatile than Argonaut Gold. It trades about 0.06 of its potential returns per unit of risk. Argonaut Gold is currently generating about 0.02 per unit of risk. If you would invest  15.00  in Radius Gold on September 22, 2024 and sell it today you would lose (10.00) from holding Radius Gold or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	77.67%
Values	Daily Returns

Radius Gold  vs.  Argonaut Gold

Radius Gold

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Radius Gold are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Radius Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Argonaut Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Radius Gold and Argonaut Gold

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

The idea behind Radius Gold and Argonaut 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..