Correlation Between Maple Gold and Banyan Gold

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

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

Diversification Opportunities for Maple Gold and Banyan Gold

0.53

Correlation Coefficient

Maple Gold  Banyan Gold

Very weak diversification

The 3 months correlation between Maple and Banyan is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Maple Gold Mines 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 Maple 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 Maple Gold Mines 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 Maple Gold i.e., Maple Gold and Banyan Gold go up and down completely randomly.

Pair Corralation between Maple Gold and Banyan Gold

Assuming the 90 days horizon Maple Gold Mines is expected to generate 1.61 times more return on investment than Banyan Gold. However, Maple Gold is 1.61 times more volatile than Banyan Gold Corp. It trades about 0.01 of its potential returns per unit of risk. Banyan Gold Corp is currently generating about -0.01 per unit of risk. If you would invest  7.50  in Maple Gold Mines on September 23, 2024 and sell it today you would lose (2.00) from holding Maple Gold Mines or give up 26.67% of portfolio value over 90 days.

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

Maple Gold Mines  vs.  Banyan Gold Corp

Maple Gold Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maple Gold Mines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Banyan Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banyan 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 basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Maple Gold and Banyan Gold

The main advantage of trading using opposite Maple Gold and Banyan Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Gold 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 Maple Gold Mines 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.