Correlation Between US Global and Topaz

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

By analyzing existing cross correlation between US Global Investors and Topaz Solar Farms, you can compare the effects of market volatilities on US Global and Topaz 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 US Global with a short position of Topaz. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and Topaz.

Diversification Opportunities for US Global and Topaz

-0.19

Correlation Coefficient

US Global  Topaz

Good diversification

The 3 months correlation between GROW and Topaz is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding US Global Investors and Topaz Solar Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topaz Solar Farms and US Global 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 US Global Investors are associated (or correlated) with Topaz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topaz Solar Farms has no effect on the direction of US Global i.e., US Global and Topaz go up and down completely randomly.

Pair Corralation between US Global and Topaz

Given the investment horizon of 90 days US Global Investors is expected to generate 1.41 times more return on investment than Topaz. However, US Global is 1.41 times more volatile than Topaz Solar Farms. It trades about 0.02 of its potential returns per unit of risk. Topaz Solar Farms is currently generating about 0.02 per unit of risk. If you would invest  240.00  in US Global Investors on October 20, 2024 and sell it today you would earn a total of  3.00  from holding US Global Investors or generate 1.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	51.61%
Values	Daily Returns

US Global Investors  vs.  Topaz Solar Farms

US Global Investors

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in US Global Investors are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, US Global is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Topaz Solar Farms

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Topaz Solar Farms are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Topaz is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with US Global and Topaz

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

The idea behind US Global Investors and Topaz Solar Farms 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.