Correlation Between Leviathan Gold and Montage Gold

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

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

Diversification Opportunities for Leviathan Gold and Montage Gold

-0.32

Correlation Coefficient

Leviathan Gold  Montage Gold

Very good diversification

The 3 months correlation between Leviathan and Montage is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Leviathan Gold and Montage Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montage Gold Corp and Leviathan 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 Leviathan Gold are associated (or correlated) with Montage Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montage Gold Corp has no effect on the direction of Leviathan Gold i.e., Leviathan Gold and Montage Gold go up and down completely randomly.

Pair Corralation between Leviathan Gold and Montage Gold

Assuming the 90 days horizon Leviathan Gold is expected to under-perform the Montage Gold. In addition to that, Leviathan Gold is 2.23 times more volatile than Montage Gold Corp. It trades about -0.18 of its total potential returns per unit of risk. Montage Gold Corp is currently generating about -0.12 per unit of volatility. If you would invest  164.00  in Montage Gold Corp on September 13, 2024 and sell it today you would lose (14.00) from holding Montage Gold Corp or give up 8.54% of portfolio value over 90 days.

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

Leviathan Gold  vs.  Montage Gold Corp

Leviathan Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Leviathan Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Leviathan Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Montage Gold Corp

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Leviathan Gold and Montage Gold

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

The idea behind Leviathan Gold and Montage Gold Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.