Correlation Between Monarch Mining and Big Ridge

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

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

Diversification Opportunities for Monarch Mining and Big Ridge

0.0

Correlation Coefficient

Monarch Mining  Big Ridge

Pay attention - limited upside

The 3 months correlation between Monarch and Big is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Monarch Mining and Big Ridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Ridge Gold and Monarch Mining 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 Monarch Mining are associated (or correlated) with Big Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Ridge Gold has no effect on the direction of Monarch Mining i.e., Monarch Mining and Big Ridge go up and down completely randomly.

Pair Corralation between Monarch Mining and Big Ridge

Assuming the 90 days horizon Monarch Mining is expected to under-perform the Big Ridge. In addition to that, Monarch Mining is 1.02 times more volatile than Big Ridge Gold. It trades about -0.01 of its total potential returns per unit of risk. Big Ridge Gold is currently generating about 0.03 per unit of volatility. If you would invest  13.00  in Big Ridge Gold on October 11, 2024 and sell it today you would lose (6.30) from holding Big Ridge Gold or give up 48.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.15%
Values	Daily Returns

Monarch Mining  vs.  Big Ridge Gold

Monarch Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monarch Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Monarch Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Big Ridge Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Big Ridge Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Big Ridge reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monarch Mining and Big Ridge

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

The idea behind Monarch Mining and Big Ridge Gold 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.