Correlation Between Galiano Gold and Liberty Gold

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

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

Diversification Opportunities for Galiano Gold and Liberty Gold

0.17

Correlation Coefficient

Galiano Gold  Liberty Gold

Average diversification

The 3 months correlation between Galiano and Liberty is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Galiano Gold and Liberty Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Gold Corp and Galiano Gold 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 Galiano Gold are associated (or correlated) with Liberty Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Gold Corp has no effect on the direction of Galiano Gold i.e., Galiano Gold and Liberty Gold go up and down completely randomly.

Pair Corralation between Galiano Gold and Liberty Gold

Considering the 90-day investment horizon Galiano Gold is expected to under-perform the Liberty Gold. But the stock apears to be less risky and, when comparing its historical volatility, Galiano Gold is 1.39 times less risky than Liberty Gold. The stock trades about -0.05 of its potential returns per unit of risk. The Liberty Gold Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Liberty Gold Corp on November 28, 2024 and sell it today you would earn a total of  1.00  from holding Liberty Gold Corp or generate 4.76% return on investment over 90 days.

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

Galiano Gold  vs.  Liberty Gold Corp

Galiano Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Galiano Gold 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Liberty Gold Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Gold Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Liberty Gold may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Galiano Gold and Liberty Gold

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

The idea behind Galiano Gold and Liberty 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.

Check out your portfolio center.

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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.