Correlation Between Excellon Resources and TRX Gold

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

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

Diversification Opportunities for Excellon Resources and TRX Gold

-0.38

Correlation Coefficient

Excellon Resources  TRX Gold

Very good diversification

The 3 months correlation between Excellon and TRX is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Excellon Resources and TRX Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRX Gold 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 TRX Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRX Gold Corp has no effect on the direction of Excellon Resources i.e., Excellon Resources and TRX Gold go up and down completely randomly.

Pair Corralation between Excellon Resources and TRX Gold

Assuming the 90 days trading horizon Excellon Resources is expected to generate 7.37 times more return on investment than TRX Gold. However, Excellon Resources is 7.37 times more volatile than TRX Gold Corp. It trades about 0.13 of its potential returns per unit of risk. TRX Gold Corp is currently generating about -0.11 per unit of risk. If you would invest  9.00  in Excellon Resources on December 21, 2024 and sell it today you would earn a total of  5.00  from holding Excellon Resources or generate 55.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Excellon Resources  vs.  TRX Gold Corp

Excellon Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Excellon Resources are ranked lower than 9 (%) 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.

TRX Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRX Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Excellon Resources and TRX Gold

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

The idea behind Excellon Resources and TRX 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 Anywhere module to track or share privately all of your investments from the convenience of any device.