Correlation Between Eagle Plains and Spring Valley

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

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

Diversification Opportunities for Eagle Plains and Spring Valley

0.15

Correlation Coefficient

Eagle Plains  Spring Valley

Average diversification

The 3 months correlation between Eagle and Spring is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Plains Resources and Spring Valley Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spring Valley Acquisition and Eagle Plains 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 Eagle Plains Resources are associated (or correlated) with Spring Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spring Valley Acquisition has no effect on the direction of Eagle Plains i.e., Eagle Plains and Spring Valley go up and down completely randomly.

Pair Corralation between Eagle Plains and Spring Valley

Assuming the 90 days horizon Eagle Plains Resources is expected to generate 25.84 times more return on investment than Spring Valley. However, Eagle Plains is 25.84 times more volatile than Spring Valley Acquisition. It trades about 0.01 of its potential returns per unit of risk. Spring Valley Acquisition is currently generating about -0.03 per unit of risk. If you would invest  10.00  in Eagle Plains Resources on October 24, 2024 and sell it today you would lose (3.00) from holding Eagle Plains Resources or give up 30.0% of portfolio value over 90 days.

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

Eagle Plains Resources  vs.  Spring Valley Acquisition

Eagle Plains Resources

Risk-Adjusted Performance

1 of 100

Modest

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

Spring Valley Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spring Valley Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Spring Valley is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Eagle Plains and Spring Valley

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

The idea behind Eagle Plains Resources and Spring Valley Acquisition 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.