Correlation Between Commerce Resources and Bravada Gold

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

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

Diversification Opportunities for Commerce Resources and Bravada Gold

0.29

Correlation Coefficient

Commerce Resources  Bravada Gold

Modest diversification

The 3 months correlation between Commerce and Bravada is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Commerce Resources Corp and Bravada Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravada Gold and Commerce Resources 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 Commerce Resources Corp are associated (or correlated) with Bravada Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravada Gold has no effect on the direction of Commerce Resources i.e., Commerce Resources and Bravada Gold go up and down completely randomly.

Pair Corralation between Commerce Resources and Bravada Gold

Assuming the 90 days horizon Commerce Resources is expected to generate 1.27 times less return on investment than Bravada Gold. But when comparing it to its historical volatility, Commerce Resources Corp is 1.31 times less risky than Bravada Gold. It trades about 0.02 of its potential returns per unit of risk. Bravada Gold is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2.48  in Bravada Gold on September 3, 2024 and sell it today you would lose (1.05) from holding Bravada Gold or give up 42.34% of portfolio value over 90 days.

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

Commerce Resources Corp  vs.  Bravada Gold

Commerce Resources Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Commerce Resources Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Commerce Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bravada Gold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bravada Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bravada Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Commerce Resources and Bravada Gold

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

The idea behind Commerce Resources Corp and Bravada Gold 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.