Correlation Between Headwater Gold and Regis Resources

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

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

Diversification Opportunities for Headwater Gold and Regis Resources

-0.46

Correlation Coefficient

Headwater Gold  Regis Resources

Very good diversification

The 3 months correlation between Headwater and Regis is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Headwater Gold and Regis Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regis Resources and Headwater 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 Headwater Gold are associated (or correlated) with Regis Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regis Resources has no effect on the direction of Headwater Gold i.e., Headwater Gold and Regis Resources go up and down completely randomly.

Pair Corralation between Headwater Gold and Regis Resources

Assuming the 90 days horizon Headwater Gold is expected to under-perform the Regis Resources. In addition to that, Headwater Gold is 1.2 times more volatile than Regis Resources. It trades about -0.07 of its total potential returns per unit of risk. Regis Resources is currently generating about 0.08 per unit of volatility. If you would invest  170.00  in Regis Resources on November 28, 2024 and sell it today you would earn a total of  29.00  from holding Regis Resources or generate 17.06% return on investment over 90 days.

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

Headwater Gold  vs.  Regis Resources

Headwater Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Headwater Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Regis Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Regis Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Regis Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Headwater Gold and Regis Resources

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

The idea behind Headwater Gold and Regis Resources 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 Global Correlations module to find global opportunities by holding instruments from different markets.