Correlation Between Banyan Gold and Maple Gold

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

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

Diversification Opportunities for Banyan Gold and Maple Gold

0.04

Correlation Coefficient

Banyan Gold  Maple Gold

Significant diversification

The 3 months correlation between Banyan and Maple is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Banyan Gold Corp and Maple Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Gold Mines and Banyan 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 Banyan Gold Corp are associated (or correlated) with Maple Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Gold Mines has no effect on the direction of Banyan Gold i.e., Banyan Gold and Maple Gold go up and down completely randomly.

Pair Corralation between Banyan Gold and Maple Gold

Assuming the 90 days horizon Banyan Gold Corp is expected to generate 0.69 times more return on investment than Maple Gold. However, Banyan Gold Corp is 1.44 times less risky than Maple Gold. It trades about 0.04 of its potential returns per unit of risk. Maple Gold Mines is currently generating about -0.07 per unit of risk. If you would invest  19.00  in Banyan Gold Corp on September 12, 2024 and sell it today you would earn a total of  1.00  from holding Banyan Gold Corp or generate 5.26% return on investment over 90 days.

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

Banyan Gold Corp  vs.  Maple Gold Mines

Banyan Gold Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Banyan Gold Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Banyan Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Maple Gold Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maple Gold Mines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Banyan Gold and Maple Gold

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

The idea behind Banyan Gold Corp and Maple Gold Mines 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.