Correlation Between Dolly Varden and Goliath Resources

Can any of the company-specific risk be diversified away by investing in both Dolly Varden and Goliath 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 Dolly Varden and Goliath Resources 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 Goliath Resources, you can compare the effects of market volatilities on Dolly Varden and Goliath 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 Dolly Varden with a short position of Goliath Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dolly Varden and Goliath Resources.

Diversification Opportunities for Dolly Varden and Goliath Resources

0.06

Correlation Coefficient

Dolly Varden  Goliath Resources

Significant diversification

The 3 months correlation between Dolly and Goliath is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dolly Varden Silver and Goliath Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goliath Resources 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 Goliath Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goliath Resources has no effect on the direction of Dolly Varden i.e., Dolly Varden and Goliath Resources go up and down completely randomly.

Pair Corralation between Dolly Varden and Goliath Resources

Given the investment horizon of 90 days Dolly Varden Silver is expected to generate 1.15 times more return on investment than Goliath Resources. However, Dolly Varden is 1.15 times more volatile than Goliath Resources. It trades about 0.06 of its potential returns per unit of risk. Goliath Resources is currently generating about 0.06 per unit of risk. If you would invest  78.00  in Dolly Varden Silver on September 3, 2024 and sell it today you would earn a total of  36.00  from holding Dolly Varden Silver or generate 46.15% return on investment over 90 days.

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

Dolly Varden Silver  vs.  Goliath Resources

Dolly Varden Silver

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dolly Varden Silver are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Dolly Varden showed solid returns over the last few months and may actually be approaching a breakup point.

Goliath Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goliath Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Dolly Varden and Goliath Resources

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

The idea behind Dolly Varden Silver and Goliath 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.