Correlation Between Bravada Gold and Eagle Mountain

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

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

Diversification Opportunities for Bravada Gold and Eagle Mountain

0.26

Correlation Coefficient

Bravada Gold  Eagle Mountain

Modest diversification

The 3 months correlation between Bravada and Eagle is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Bravada Gold and Eagle Mountain Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Mountain Mining and Bravada 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 Bravada Gold are associated (or correlated) with Eagle Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Mountain Mining has no effect on the direction of Bravada Gold i.e., Bravada Gold and Eagle Mountain go up and down completely randomly.

Pair Corralation between Bravada Gold and Eagle Mountain

Assuming the 90 days horizon Bravada Gold is expected to generate 482.45 times less return on investment than Eagle Mountain. But when comparing it to its historical volatility, Bravada Gold is 23.51 times less risky than Eagle Mountain. It trades about 0.01 of its potential returns per unit of risk. Eagle Mountain Mining is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Eagle Mountain Mining on October 9, 2024 and sell it today you would lose (1.67) from holding Eagle Mountain Mining or give up 55.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Bravada Gold  vs.  Eagle Mountain Mining

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.

Eagle Mountain Mining

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Mountain Mining are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Eagle Mountain reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bravada Gold and Eagle Mountain

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

The idea behind Bravada Gold and Eagle Mountain Mining 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.