Correlation Between Tudor Gold and St James

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

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

Diversification Opportunities for Tudor Gold and St James

0.35

Correlation Coefficient

Tudor Gold  St James

Weak diversification

The 3 months correlation between Tudor and LRDJF is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tudor Gold Corp and St James Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St James Gold and Tudor 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 Tudor Gold Corp are associated (or correlated) with St James. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St James Gold has no effect on the direction of Tudor Gold i.e., Tudor Gold and St James go up and down completely randomly.

Pair Corralation between Tudor Gold and St James

Assuming the 90 days horizon Tudor Gold is expected to generate 4.14 times less return on investment than St James. But when comparing it to its historical volatility, Tudor Gold Corp is 2.0 times less risky than St James. It trades about 0.02 of its potential returns per unit of risk. St James Gold is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7.50  in St James Gold on September 4, 2024 and sell it today you would earn a total of  0.00  from holding St James Gold or generate 0.0% return on investment over 90 days.

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

Tudor Gold Corp  vs.  St James Gold

Tudor Gold Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tudor Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tudor Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

St James Gold

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in St James Gold are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking indicators, St James reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tudor Gold and St James

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

The idea behind Tudor Gold Corp and St James 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.