Correlation Between Ero Copper and Austin Gold

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

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

Diversification Opportunities for Ero Copper and Austin Gold

0.02

Correlation Coefficient

Ero Copper  Austin Gold

Significant diversification

The 3 months correlation between Ero and Austin is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ero Copper Corp and Austin Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austin Gold Corp and Ero Copper 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 Ero Copper Corp are associated (or correlated) with Austin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austin Gold Corp has no effect on the direction of Ero Copper i.e., Ero Copper and Austin Gold go up and down completely randomly.

Pair Corralation between Ero Copper and Austin Gold

Considering the 90-day investment horizon Ero Copper is expected to generate 44.88 times less return on investment than Austin Gold. But when comparing it to its historical volatility, Ero Copper Corp is 1.89 times less risky than Austin Gold. It trades about 0.0 of its potential returns per unit of risk. Austin Gold Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  118.00  in Austin Gold Corp on December 27, 2024 and sell it today you would earn a total of  20.00  from holding Austin Gold Corp or generate 16.95% return on investment over 90 days.

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

Ero Copper Corp  vs.  Austin Gold Corp

Ero Copper Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ero Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Ero Copper is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Austin Gold Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Austin Gold Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Austin Gold unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ero Copper and Austin Gold

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

The idea behind Ero Copper Corp and Austin 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.