Correlation Between Big Ridge and Vista Gold

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

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

Diversification Opportunities for Big Ridge and Vista Gold

0.22

Correlation Coefficient

Big Ridge  Vista Gold

Modest diversification

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

Pair Corralation between Big Ridge and Vista Gold

Assuming the 90 days horizon Big Ridge Gold is expected to generate 2.02 times more return on investment than Vista Gold. However, Big Ridge is 2.02 times more volatile than Vista Gold. It trades about 0.07 of its potential returns per unit of risk. Vista Gold is currently generating about 0.07 per unit of risk. If you would invest  4.00  in Big Ridge Gold on September 4, 2024 and sell it today you would earn a total of  3.50  from holding Big Ridge Gold or generate 87.5% return on investment over 90 days.

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

Big Ridge Gold  vs.  Vista Gold

Big Ridge Gold

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Big Ridge Gold are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Big Ridge reported solid returns over the last few months and may actually be approaching a breakup point.

Vista Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vista Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Vista Gold is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Big Ridge and Vista Gold

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

The idea behind Big Ridge Gold and Vista 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.