Correlation Between Excellon Resources and Outback Goldfields

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

By analyzing existing cross correlation between Excellon Resources and Outback Goldfields Corp, you can compare the effects of market volatilities on Excellon Resources and Outback Goldfields 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 Outback Goldfields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excellon Resources and Outback Goldfields.

Diversification Opportunities for Excellon Resources and Outback Goldfields

0.56

Correlation Coefficient

Excellon Resources  Outback Goldfields

Very weak diversification

The 3 months correlation between Excellon and Outback is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Excellon Resources and Outback Goldfields Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outback Goldfields Corp 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 Outback Goldfields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outback Goldfields Corp has no effect on the direction of Excellon Resources i.e., Excellon Resources and Outback Goldfields go up and down completely randomly.

Pair Corralation between Excellon Resources and Outback Goldfields

Assuming the 90 days trading horizon Excellon Resources is expected to under-perform the Outback Goldfields. But the stock apears to be less risky and, when comparing its historical volatility, Excellon Resources is 1.13 times less risky than Outback Goldfields. The stock trades about -0.03 of its potential returns per unit of risk. The Outback Goldfields Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Outback Goldfields Corp on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Outback Goldfields Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Excellon Resources  vs.  Outback Goldfields Corp

Excellon Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Outback Goldfields Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Outback Goldfields Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Outback Goldfields may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Excellon Resources and Outback Goldfields

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

The idea behind Excellon Resources and Outback Goldfields 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 Global Correlations module to find global opportunities by holding instruments from different markets.