Correlation Between Big Ridge and Q Gold

Can any of the company-specific risk be diversified away by investing in both Big Ridge and Q 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 Q 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 Q Gold Resources, you can compare the effects of market volatilities on Big Ridge and Q 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 Q Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Ridge and Q Gold.

Diversification Opportunities for Big Ridge and Q Gold

0.18

Correlation Coefficient

Big Ridge  Q Gold

Average diversification

The 3 months correlation between Big and QGR is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Big Ridge Gold and Q Gold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q Gold Resources 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 Q Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q Gold Resources has no effect on the direction of Big Ridge i.e., Big Ridge and Q Gold go up and down completely randomly.

Pair Corralation between Big Ridge and Q Gold

Assuming the 90 days trading horizon Big Ridge Gold is expected to generate 0.72 times more return on investment than Q Gold. However, Big Ridge Gold is 1.39 times less risky than Q Gold. It trades about 0.05 of its potential returns per unit of risk. Q Gold Resources is currently generating about -0.02 per unit of risk. If you would invest  10.00  in Big Ridge Gold on October 3, 2024 and sell it today you would earn a total of  1.00  from holding Big Ridge Gold or generate 10.0% return on investment over 90 days.

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

Big Ridge Gold  vs.  Q Gold Resources

Big Ridge Gold

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Big Ridge Gold are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Big Ridge showed solid returns over the last few months and may actually be approaching a breakup point.

Q Gold Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Q Gold Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal 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 Big Ridge and Q Gold

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

The idea behind Big Ridge Gold and Q Gold Resources 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.