Correlation Between Marimaca Copper and Banyan Gold

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

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

Diversification Opportunities for Marimaca Copper and Banyan Gold

0.24

Correlation Coefficient

Marimaca Copper  Banyan Gold

Modest diversification

The 3 months correlation between Marimaca and Banyan is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Marimaca Copper Corp and Banyan Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banyan Gold Corp and Marimaca Copper 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 Marimaca Copper Corp are associated (or correlated) with Banyan Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banyan Gold Corp has no effect on the direction of Marimaca Copper i.e., Marimaca Copper and Banyan Gold go up and down completely randomly.

Pair Corralation between Marimaca Copper and Banyan Gold

Assuming the 90 days trading horizon Marimaca Copper is expected to generate 1.55 times less return on investment than Banyan Gold. But when comparing it to its historical volatility, Marimaca Copper Corp is 1.67 times less risky than Banyan Gold. It trades about 0.11 of its potential returns per unit of risk. Banyan Gold Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Banyan Gold Corp on December 24, 2024 and sell it today you would earn a total of  4.00  from holding Banyan Gold Corp or generate 21.05% return on investment over 90 days.

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

Marimaca Copper Corp  vs.  Banyan Gold Corp

Marimaca Copper Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marimaca Copper Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Marimaca Copper displayed solid returns over the last few months and may actually be approaching a breakup point.

Banyan Gold Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Banyan Gold Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Banyan Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marimaca Copper and Banyan Gold

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

The idea behind Marimaca Copper Corp and Banyan 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.