Correlation Between Clifton Mining and Provenance Gold

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

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

Diversification Opportunities for Clifton Mining and Provenance Gold

-0.37

Correlation Coefficient

Clifton Mining  Provenance Gold

Very good diversification

The 3 months correlation between Clifton and Provenance is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Clifton Mining Co and Provenance Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provenance Gold Corp and Clifton Mining 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 Clifton Mining Co are associated (or correlated) with Provenance Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provenance Gold Corp has no effect on the direction of Clifton Mining i.e., Clifton Mining and Provenance Gold go up and down completely randomly.

Pair Corralation between Clifton Mining and Provenance Gold

Given the investment horizon of 90 days Clifton Mining Co is expected to generate 1.08 times more return on investment than Provenance Gold. However, Clifton Mining is 1.08 times more volatile than Provenance Gold Corp. It trades about 0.05 of its potential returns per unit of risk. Provenance Gold Corp is currently generating about 0.01 per unit of risk. If you would invest  5.00  in Clifton Mining Co on October 10, 2024 and sell it today you would earn a total of  0.01  from holding Clifton Mining Co or generate 0.2% return on investment over 90 days.

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

Clifton Mining Co  vs.  Provenance Gold Corp

Clifton Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clifton Mining Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Clifton Mining is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Provenance Gold Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Provenance Gold Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Provenance Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clifton Mining and Provenance Gold

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

The idea behind Clifton Mining Co and Provenance Gold Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.