Correlation Between Tristar Gold and Independence Gold

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

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

Diversification Opportunities for Tristar Gold and Independence Gold

0.22

Correlation Coefficient

Tristar Gold  Independence Gold

Modest diversification

The 3 months correlation between Tristar and Independence is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Tristar Gold and Independence Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independence Gold Corp and Tristar 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 Tristar Gold are associated (or correlated) with Independence Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independence Gold Corp has no effect on the direction of Tristar Gold i.e., Tristar Gold and Independence Gold go up and down completely randomly.

Pair Corralation between Tristar Gold and Independence Gold

Assuming the 90 days horizon Tristar Gold is expected to generate 1.29 times less return on investment than Independence Gold. In addition to that, Tristar Gold is 1.13 times more volatile than Independence Gold Corp. It trades about 0.03 of its total potential returns per unit of risk. Independence Gold Corp is currently generating about 0.05 per unit of volatility. If you would invest  12.00  in Independence Gold Corp on September 29, 2024 and sell it today you would earn a total of  8.00  from holding Independence Gold Corp or generate 66.67% return on investment over 90 days.

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

Tristar Gold  vs.  Independence Gold Corp

Tristar Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tristar Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Independence Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Independence Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Independence Gold is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Tristar Gold and Independence Gold

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

The idea behind Tristar Gold and Independence Gold Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.