Correlation Between Carlin Gold and Eastfield Resources

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

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

Diversification Opportunities for Carlin Gold and Eastfield Resources

0.0

Correlation Coefficient

Carlin Gold  Eastfield Resources

Pay attention - limited upside

The 3 months correlation between Carlin and Eastfield is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Carlin Gold and Eastfield Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastfield Resources and Carlin 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 Carlin Gold are associated (or correlated) with Eastfield Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastfield Resources has no effect on the direction of Carlin Gold i.e., Carlin Gold and Eastfield Resources go up and down completely randomly.

Pair Corralation between Carlin Gold and Eastfield Resources

Assuming the 90 days horizon Carlin Gold is expected to generate 4.25 times less return on investment than Eastfield Resources. But when comparing it to its historical volatility, Carlin Gold is 1.51 times less risky than Eastfield Resources. It trades about 0.02 of its potential returns per unit of risk. Eastfield Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Eastfield Resources on October 13, 2024 and sell it today you would lose (1.50) from holding Eastfield Resources or give up 37.5% of portfolio value over 90 days.

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

Carlin Gold  vs.  Eastfield Resources

Carlin Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eastfield Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastfield Resources 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Carlin Gold and Eastfield Resources

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

The idea behind Carlin Gold and Eastfield 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.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.