Correlation Between Vista Gold and Cineplex

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

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

Diversification Opportunities for Vista Gold and Cineplex

-0.36

Correlation Coefficient

Vista Gold  Cineplex

Very good diversification

The 3 months correlation between Vista and Cineplex is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Vista Gold and Cineplex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cineplex and Vista 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 Vista Gold are associated (or correlated) with Cineplex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cineplex has no effect on the direction of Vista Gold i.e., Vista Gold and Cineplex go up and down completely randomly.

Pair Corralation between Vista Gold and Cineplex

Assuming the 90 days trading horizon Vista Gold is expected to under-perform the Cineplex. In addition to that, Vista Gold is 2.06 times more volatile than Cineplex. It trades about -0.05 of its total potential returns per unit of risk. Cineplex is currently generating about 0.12 per unit of volatility. If you would invest  1,095  in Cineplex on September 21, 2024 and sell it today you would earn a total of  154.00  from holding Cineplex or generate 14.06% return on investment over 90 days.

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

Vista Gold  vs.  Cineplex

Vista Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vista Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cineplex

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cineplex are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Cineplex displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vista Gold and Cineplex

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

The idea behind Vista Gold and Cineplex 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.