Correlation Between Sitka Gold and Argonaut Gold

Can any of the company-specific risk be diversified away by investing in both Sitka 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 Sitka 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 Sitka Gold Corp and Argonaut Gold, you can compare the effects of market volatilities on Sitka 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 Sitka Gold with a short position of Argonaut Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitka Gold and Argonaut Gold.

Diversification Opportunities for Sitka Gold and Argonaut Gold

-0.04

Correlation Coefficient

Sitka Gold  Argonaut Gold

Good diversification

The 3 months correlation between Sitka and Argonaut is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sitka Gold Corp and Argonaut Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argonaut Gold and Sitka 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 Sitka Gold Corp 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 Sitka Gold i.e., Sitka Gold and Argonaut Gold go up and down completely randomly.

Pair Corralation between Sitka Gold and Argonaut Gold

If you would invest  21.00  in Sitka Gold Corp on September 22, 2024 and sell it today you would earn a total of  3.00  from holding Sitka Gold Corp or generate 14.29% return on investment over 90 days.

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

Sitka Gold Corp  vs.  Argonaut Gold

Sitka Gold Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sitka Gold Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Sitka 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 Sitka Gold and Argonaut Gold

The main advantage of trading using opposite Sitka Gold and Argonaut Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sitka 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 Sitka Gold Corp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.