Correlation Between Troilus Gold and Mineral Res

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

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

Diversification Opportunities for Troilus Gold and Mineral Res

0.26

Correlation Coefficient

Troilus Gold  Mineral Res

Modest diversification

The 3 months correlation between Troilus and Mineral is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Troilus Gold Corp and Mineral Res in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Res and Troilus 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 Troilus Gold Corp are associated (or correlated) with Mineral Res. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Res has no effect on the direction of Troilus Gold i.e., Troilus Gold and Mineral Res go up and down completely randomly.

Pair Corralation between Troilus Gold and Mineral Res

Assuming the 90 days horizon Troilus Gold Corp is expected to generate 1.27 times more return on investment than Mineral Res. However, Troilus Gold is 1.27 times more volatile than Mineral Res. It trades about -0.04 of its potential returns per unit of risk. Mineral Res is currently generating about -0.05 per unit of risk. If you would invest  40.00  in Troilus Gold Corp on October 22, 2024 and sell it today you would lose (19.00) from holding Troilus Gold Corp or give up 47.5% of portfolio value over 90 days.

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

Troilus Gold Corp  vs.  Mineral Res

Troilus Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Troilus Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Troilus Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Mineral Res

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mineral Res has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Mineral Res is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Troilus Gold and Mineral Res

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

The idea behind Troilus Gold Corp and Mineral Res 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.