Correlation Between International Tower and Golden Minerals

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

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

Diversification Opportunities for International Tower and Golden Minerals

0.52

Correlation Coefficient

International Tower  Golden Minerals

Very weak diversification

The 3 months correlation between International and Golden is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding International Tower Hill and Golden Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Minerals and International Tower 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 International Tower Hill are associated (or correlated) with Golden Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Minerals has no effect on the direction of International Tower i.e., International Tower and Golden Minerals go up and down completely randomly.

Pair Corralation between International Tower and Golden Minerals

Considering the 90-day investment horizon International Tower Hill is expected to generate 0.83 times more return on investment than Golden Minerals. However, International Tower Hill is 1.21 times less risky than Golden Minerals. It trades about 0.0 of its potential returns per unit of risk. Golden Minerals is currently generating about -0.07 per unit of risk. If you would invest  54.00  in International Tower Hill on September 12, 2024 and sell it today you would lose (6.00) from holding International Tower Hill or give up 11.11% of portfolio value over 90 days.

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

International Tower Hill  vs.  Golden Minerals

International Tower Hill

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Tower Hill has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, International Tower is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Golden Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Golden Minerals is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with International Tower and Golden Minerals

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

The idea behind International Tower Hill and Golden Minerals 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.