Correlation Between European Residential and Triumph Gold

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

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

Diversification Opportunities for European Residential and Triumph Gold

-0.06

Correlation Coefficient

European Residential  Triumph Gold

Good diversification

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

Pair Corralation between European Residential and Triumph Gold

Assuming the 90 days trading horizon European Residential Real is expected to under-perform the Triumph Gold. But the stock apears to be less risky and, when comparing its historical volatility, European Residential Real is 3.13 times less risky than Triumph Gold. The stock trades about 0.0 of its potential returns per unit of risk. The Triumph Gold Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Triumph Gold Corp on October 11, 2024 and sell it today you would lose (3.00) from holding Triumph Gold Corp or give up 12.0% of portfolio value over 90 days.

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

European Residential Real  vs.  Triumph Gold Corp

European Residential Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Residential Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Triumph Gold Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Triumph Gold Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Triumph Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with European Residential and Triumph Gold

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

The idea behind European Residential Real and Triumph Gold Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.