Correlation Between B2Gold Corp and Brunswick Exploration

Can any of the company-specific risk be diversified away by investing in both B2Gold Corp and Brunswick Exploration 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 B2Gold Corp and Brunswick Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between B2Gold Corp and Brunswick Exploration, you can compare the effects of market volatilities on B2Gold Corp and Brunswick Exploration 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 B2Gold Corp with a short position of Brunswick Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of B2Gold Corp and Brunswick Exploration.

Diversification Opportunities for B2Gold Corp and Brunswick Exploration

0.54

Correlation Coefficient

B2Gold Corp  Brunswick Exploration

Very weak diversification

The 3 months correlation between B2Gold and Brunswick is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding B2Gold Corp and Brunswick Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick Exploration and B2Gold 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 B2Gold Corp are associated (or correlated) with Brunswick Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick Exploration has no effect on the direction of B2Gold Corp i.e., B2Gold Corp and Brunswick Exploration go up and down completely randomly.

Pair Corralation between B2Gold Corp and Brunswick Exploration

Considering the 90-day investment horizon B2Gold Corp is expected to under-perform the Brunswick Exploration. But the stock apears to be less risky and, when comparing its historical volatility, B2Gold Corp is 3.22 times less risky than Brunswick Exploration. The stock trades about -0.06 of its potential returns per unit of risk. The Brunswick Exploration is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Brunswick Exploration on September 13, 2024 and sell it today you would lose (3.00) from holding Brunswick Exploration or give up 23.08% of portfolio value over 90 days.

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

B2Gold Corp  vs.  Brunswick Exploration

B2Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days B2Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Brunswick Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brunswick Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with B2Gold Corp and Brunswick Exploration

The main advantage of trading using opposite B2Gold Corp and Brunswick Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B2Gold Corp position performs unexpectedly, Brunswick Exploration 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 Brunswick Exploration will offset losses from the drop in Brunswick Exploration's long position.

The idea behind B2Gold Corp and Brunswick Exploration 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.