Correlation Between Generation Mining and Rubicon Organics

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

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

Diversification Opportunities for Generation Mining and Rubicon Organics

0.29

Correlation Coefficient

Generation Mining  Rubicon Organics

Modest diversification

The 3 months correlation between Generation and Rubicon is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Generation Mining and Rubicon Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Organics and Generation 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 Generation Mining are associated (or correlated) with Rubicon Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Organics has no effect on the direction of Generation Mining i.e., Generation Mining and Rubicon Organics go up and down completely randomly.

Pair Corralation between Generation Mining and Rubicon Organics

Assuming the 90 days trading horizon Generation Mining is expected to generate 1.28 times more return on investment than Rubicon Organics. However, Generation Mining is 1.28 times more volatile than Rubicon Organics. It trades about 0.09 of its potential returns per unit of risk. Rubicon Organics is currently generating about 0.04 per unit of risk. If you would invest  15.00  in Generation Mining on December 24, 2024 and sell it today you would earn a total of  4.00  from holding Generation Mining or generate 26.67% return on investment over 90 days.

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

Generation Mining  vs.  Rubicon Organics

Generation Mining

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Generation Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Generation Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Rubicon Organics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Organics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Rubicon Organics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Generation Mining and Rubicon Organics

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

The idea behind Generation Mining and Rubicon Organics 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.