Correlation Between Dolly Varden and Bald Eagle

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

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

Diversification Opportunities for Dolly Varden and Bald Eagle

-0.2

Correlation Coefficient

Dolly Varden  Bald Eagle

Good diversification

The 3 months correlation between Dolly and Bald is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dolly Varden Silver and Bald Eagle Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bald Eagle Gold and Dolly Varden 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 Dolly Varden Silver are associated (or correlated) with Bald Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bald Eagle Gold has no effect on the direction of Dolly Varden i.e., Dolly Varden and Bald Eagle go up and down completely randomly.

Pair Corralation between Dolly Varden and Bald Eagle

Assuming the 90 days horizon Dolly Varden Silver is expected to under-perform the Bald Eagle. But the otc stock apears to be less risky and, when comparing its historical volatility, Dolly Varden Silver is 1.34 times less risky than Bald Eagle. The otc stock trades about -0.26 of its potential returns per unit of risk. The Bald Eagle Gold is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Bald Eagle Gold on August 31, 2024 and sell it today you would earn a total of  5.00  from holding Bald Eagle Gold or generate 13.89% return on investment over 90 days.

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

Dolly Varden Silver  vs.  Bald Eagle Gold

Dolly Varden Silver

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dolly Varden Silver are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Dolly Varden may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Bald Eagle Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bald Eagle Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Dolly Varden and Bald Eagle

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

The idea behind Dolly Varden Silver and Bald Eagle 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.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.