Correlation Between Stroud Resources and Trigon Metals

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

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

Diversification Opportunities for Stroud Resources and Trigon Metals

0.25

Correlation Coefficient

Stroud Resources  Trigon Metals

Modest diversification

The 3 months correlation between Stroud and Trigon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Stroud Resources and Trigon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trigon Metals and Stroud Resources 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 Stroud Resources are associated (or correlated) with Trigon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trigon Metals has no effect on the direction of Stroud Resources i.e., Stroud Resources and Trigon Metals go up and down completely randomly.

Pair Corralation between Stroud Resources and Trigon Metals

Assuming the 90 days horizon Stroud Resources is expected to generate 2.9 times more return on investment than Trigon Metals. However, Stroud Resources is 2.9 times more volatile than Trigon Metals. It trades about 0.05 of its potential returns per unit of risk. Trigon Metals is currently generating about -0.01 per unit of risk. If you would invest  14.00  in Stroud Resources on September 7, 2024 and sell it today you would lose (8.50) from holding Stroud Resources or give up 60.71% of portfolio value over 90 days.

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

Stroud Resources  vs.  Trigon Metals

Stroud Resources

Risk-Adjusted Performance

4 of 100

Insignificant

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

Trigon Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Trigon Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Trigon Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Stroud Resources and Trigon Metals

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

The idea behind Stroud Resources and Trigon Metals 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.