Correlation Between Liberty Gold and Revival Gold

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

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

Diversification Opportunities for Liberty Gold and Revival Gold

0.7

Correlation Coefficient

Liberty Gold  Revival Gold

Poor diversification

The 3 months correlation between Liberty and Revival is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Gold Corp and Revival Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revival Gold and Liberty 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 Liberty Gold Corp are associated (or correlated) with Revival Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revival Gold has no effect on the direction of Liberty Gold i.e., Liberty Gold and Revival Gold go up and down completely randomly.

Pair Corralation between Liberty Gold and Revival Gold

Assuming the 90 days trading horizon Liberty Gold Corp is expected to under-perform the Revival Gold. In addition to that, Liberty Gold is 1.02 times more volatile than Revival Gold. It trades about -0.05 of its total potential returns per unit of risk. Revival Gold is currently generating about 0.02 per unit of volatility. If you would invest  30.00  in Revival Gold on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Revival Gold or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Liberty Gold Corp  vs.  Revival Gold

Liberty Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Revival Gold

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Liberty Gold and Revival Gold

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

The idea behind Liberty Gold Corp and Revival 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.