Correlation Between Trilogy Metals and Ascot Resources

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

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

Diversification Opportunities for Trilogy Metals and Ascot Resources

0.21

Correlation Coefficient

Trilogy Metals  Ascot Resources

Modest diversification

The 3 months correlation between Trilogy and Ascot is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Trilogy Metals and Ascot Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascot Resources and Trilogy Metals 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 Trilogy Metals are associated (or correlated) with Ascot Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascot Resources has no effect on the direction of Trilogy Metals i.e., Trilogy Metals and Ascot Resources go up and down completely randomly.

Pair Corralation between Trilogy Metals and Ascot Resources

Assuming the 90 days trading horizon Trilogy Metals is expected to generate 2.01 times more return on investment than Ascot Resources. However, Trilogy Metals is 2.01 times more volatile than Ascot Resources. It trades about 0.14 of its potential returns per unit of risk. Ascot Resources is currently generating about 0.03 per unit of risk. If you would invest  67.00  in Trilogy Metals on September 23, 2024 and sell it today you would earn a total of  91.00  from holding Trilogy Metals or generate 135.82% return on investment over 90 days.

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

Trilogy Metals  vs.  Ascot Resources

Trilogy Metals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trilogy Metals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Trilogy Metals displayed solid returns over the last few months and may actually be approaching a breakup point.

Ascot Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ascot Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Ascot Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trilogy Metals and Ascot Resources

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

The idea behind Trilogy Metals and Ascot Resources 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.