Correlation Between Excellon Resources and Great West

Can any of the company-specific risk be diversified away by investing in both Excellon Resources and Great West 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 Excellon Resources and Great West into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Excellon Resources and Great West Lifeco, you can compare the effects of market volatilities on Excellon Resources and Great West 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 Excellon Resources with a short position of Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excellon Resources and Great West.

Diversification Opportunities for Excellon Resources and Great West

0.49

Correlation Coefficient

Excellon Resources  Great West

Very weak diversification

The 3 months correlation between Excellon and Great is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Excellon Resources and Great West Lifeco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifeco and Excellon Resources 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 Excellon Resources are associated (or correlated) with Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifeco has no effect on the direction of Excellon Resources i.e., Excellon Resources and Great West go up and down completely randomly.

Pair Corralation between Excellon Resources and Great West

Assuming the 90 days trading horizon Excellon Resources is expected to generate 5.49 times more return on investment than Great West. However, Excellon Resources is 5.49 times more volatile than Great West Lifeco. It trades about 0.15 of its potential returns per unit of risk. Great West Lifeco is currently generating about 0.14 per unit of risk. If you would invest  9.00  in Excellon Resources on December 22, 2024 and sell it today you would earn a total of  7.00  from holding Excellon Resources or generate 77.78% return on investment over 90 days.

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

Excellon Resources  vs.  Great West Lifeco

Excellon Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Excellon Resources are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Excellon Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Great West Lifeco

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Lifeco are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Great West displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Excellon Resources and Great West

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

The idea behind Excellon Resources and Great West Lifeco 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.