Correlation Between Montage Gold and Troilus Gold

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

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

Diversification Opportunities for Montage Gold and Troilus Gold

-0.59

Correlation Coefficient

Montage Gold  Troilus Gold

Excellent diversification

The 3 months correlation between Montage and Troilus is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Montage Gold Corp and Troilus Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Troilus Gold Corp and Montage 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 Montage Gold Corp are associated (or correlated) with Troilus Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Troilus Gold Corp has no effect on the direction of Montage Gold i.e., Montage Gold and Troilus Gold go up and down completely randomly.

Pair Corralation between Montage Gold and Troilus Gold

Assuming the 90 days horizon Montage Gold Corp is expected to under-perform the Troilus Gold. But the stock apears to be less risky and, when comparing its historical volatility, Montage Gold Corp is 1.86 times less risky than Troilus Gold. The stock trades about -0.04 of its potential returns per unit of risk. The Troilus Gold Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Troilus Gold Corp on September 12, 2024 and sell it today you would earn a total of  9.00  from holding Troilus Gold Corp or generate 34.62% return on investment over 90 days.

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

Montage Gold Corp  vs.  Troilus Gold Corp

Montage Gold Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Montage Gold Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Montage Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Troilus Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Troilus 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 technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Montage Gold and Troilus Gold

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

The idea behind Montage Gold Corp and Troilus 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.