Correlation Between Austin Gold and Dow

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

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

Diversification Opportunities for Austin Gold and Dow

-0.48

Correlation Coefficient

Austin Gold  Dow

Very good diversification

The 3 months correlation between Austin and Dow is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Austin Gold Corp and Dow Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Inc and Austin 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 Austin Gold Corp are associated (or correlated) with Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Inc has no effect on the direction of Austin Gold i.e., Austin Gold and Dow go up and down completely randomly.

Pair Corralation between Austin Gold and Dow

Given the investment horizon of 90 days Austin Gold Corp is expected to generate 2.88 times more return on investment than Dow. However, Austin Gold is 2.88 times more volatile than Dow Inc. It trades about 0.07 of its potential returns per unit of risk. Dow Inc is currently generating about -0.08 per unit of risk. If you would invest  118.00  in Austin Gold Corp on December 27, 2024 and sell it today you would earn a total of  20.00  from holding Austin Gold Corp or generate 16.95% return on investment over 90 days.

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

Austin Gold Corp  vs.  Dow Inc

Austin Gold Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Austin Gold Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Austin Gold unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dow Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dow Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Austin Gold and Dow

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

The idea behind Austin Gold Corp and Dow Inc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.