Correlation Between Volcanic Gold and Argonaut Gold

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

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

Diversification Opportunities for Volcanic Gold and Argonaut Gold

-0.25

Correlation Coefficient

Volcanic Gold  Argonaut Gold

Very good diversification

The 3 months correlation between Volcanic and Argonaut is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Volcanic Gold Mines and Argonaut Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argonaut Gold and Volcanic 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 Volcanic Gold Mines are associated (or correlated) with Argonaut Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argonaut Gold has no effect on the direction of Volcanic Gold i.e., Volcanic Gold and Argonaut Gold go up and down completely randomly.

Pair Corralation between Volcanic Gold and Argonaut Gold

If you would invest  5.37  in Volcanic Gold Mines on September 22, 2024 and sell it today you would earn a total of  0.63  from holding Volcanic Gold Mines or generate 11.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.52%
Values	Daily Returns

Volcanic Gold Mines  vs.  Argonaut Gold

Volcanic Gold Mines

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Volcanic Gold Mines are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Volcanic Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Argonaut Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Volcanic Gold and Argonaut Gold

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

The idea behind Volcanic Gold Mines and Argonaut Gold 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 Transaction History module to view history of all your transactions and understand their impact on performance.