Correlation Between Arizona Sonoran and Banyan Gold

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

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

Diversification Opportunities for Arizona Sonoran and Banyan Gold

-0.3

Correlation Coefficient

Arizona Sonoran  Banyan Gold

Very good diversification

The 3 months correlation between Arizona and Banyan is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Arizona Sonoran Copper and Banyan Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banyan Gold Corp and Arizona Sonoran 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 Arizona Sonoran Copper are associated (or correlated) with Banyan Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banyan Gold Corp has no effect on the direction of Arizona Sonoran i.e., Arizona Sonoran and Banyan Gold go up and down completely randomly.

Pair Corralation between Arizona Sonoran and Banyan Gold

Assuming the 90 days trading horizon Arizona Sonoran Copper is expected to generate 1.28 times more return on investment than Banyan Gold. However, Arizona Sonoran is 1.28 times more volatile than Banyan Gold Corp. It trades about 0.28 of its potential returns per unit of risk. Banyan Gold Corp is currently generating about -0.07 per unit of risk. If you would invest  138.00  in Arizona Sonoran Copper on October 22, 2024 and sell it today you would earn a total of  30.00  from holding Arizona Sonoran Copper or generate 21.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Arizona Sonoran Copper  vs.  Banyan Gold Corp

Arizona Sonoran Copper

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arizona Sonoran Copper are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Arizona Sonoran is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Banyan Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banyan Gold Corp 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Arizona Sonoran and Banyan Gold

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

The idea behind Arizona Sonoran Copper and Banyan 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 Global Correlations module to find global opportunities by holding instruments from different markets.