Correlation Between Treasury Metals and GGX Gold

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

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

Diversification Opportunities for Treasury Metals and GGX Gold

0.05

Correlation Coefficient

Treasury Metals  GGX Gold

Significant diversification

The 3 months correlation between Treasury and GGX is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Metals and GGX Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GGX Gold Corp and Treasury 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 Treasury Metals are associated (or correlated) with GGX Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GGX Gold Corp has no effect on the direction of Treasury Metals i.e., Treasury Metals and GGX Gold go up and down completely randomly.

Pair Corralation between Treasury Metals and GGX Gold

Assuming the 90 days horizon Treasury Metals is expected to generate 6.85 times less return on investment than GGX Gold. But when comparing it to its historical volatility, Treasury Metals is 2.59 times less risky than GGX Gold. It trades about 0.01 of its potential returns per unit of risk. GGX Gold Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4.48  in GGX Gold Corp on September 5, 2024 and sell it today you would lose (3.07) from holding GGX Gold Corp or give up 68.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	78.99%
Values	Daily Returns

Treasury Metals  vs.  GGX Gold Corp

Treasury Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Treasury Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Treasury Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GGX Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GGX Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Treasury Metals and GGX Gold

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

The idea behind Treasury Metals and GGX 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.