Correlation Between Atlas Corp and Bravada Gold

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

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

Diversification Opportunities for Atlas Corp and Bravada Gold

-0.51

Correlation Coefficient

Atlas Corp  Bravada Gold

Excellent diversification

The 3 months correlation between Atlas and Bravada is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Corp and Bravada Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravada Gold and Atlas Corp 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 Atlas Corp are associated (or correlated) with Bravada Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravada Gold has no effect on the direction of Atlas Corp i.e., Atlas Corp and Bravada Gold go up and down completely randomly.

Pair Corralation between Atlas Corp and Bravada Gold

Assuming the 90 days horizon Atlas Corp is expected to generate 9.13 times less return on investment than Bravada Gold. But when comparing it to its historical volatility, Atlas Corp is 40.26 times less risky than Bravada Gold. It trades about 0.07 of its potential returns per unit of risk. Bravada Gold is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2.48  in Bravada Gold on September 3, 2024 and sell it today you would lose (1.05) from holding Bravada Gold or give up 42.34% of portfolio value over 90 days.

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

Atlas Corp  vs.  Bravada Gold

Atlas Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Atlas Corp is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Bravada Gold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bravada Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bravada Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atlas Corp and Bravada Gold

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

The idea behind Atlas Corp and Bravada 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 Global Correlations module to find global opportunities by holding instruments from different markets.