Correlation Between Liberty Gold and Timberline Resources

Can any of the company-specific risk be diversified away by investing in both Liberty Gold and Timberline 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 Liberty Gold and Timberline Resources 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 Timberline Resources, you can compare the effects of market volatilities on Liberty Gold and Timberline 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 Liberty Gold with a short position of Timberline Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Gold and Timberline Resources.

Diversification Opportunities for Liberty Gold and Timberline Resources

0.79

Correlation Coefficient

Liberty Gold  Timberline Resources

Poor diversification

The 3 months correlation between Liberty and Timberline is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Gold Corp and Timberline Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timberline Resources 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 Timberline Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timberline Resources has no effect on the direction of Liberty Gold i.e., Liberty Gold and Timberline Resources go up and down completely randomly.

Pair Corralation between Liberty Gold and Timberline Resources

Assuming the 90 days horizon Liberty Gold Corp is expected to under-perform the Timberline Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Liberty Gold Corp is 2.18 times less risky than Timberline Resources. The otc stock trades about -0.02 of its potential returns per unit of risk. The Timberline Resources is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Timberline Resources on October 26, 2024 and sell it today you would lose (4.00) from holding Timberline Resources or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	23.53%
Values	Daily Returns

Liberty Gold Corp  vs.  Timberline Resources

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Timberline Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timberline Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Timberline Resources is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Liberty Gold and Timberline Resources

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

The idea behind Liberty Gold Corp and Timberline 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.