Correlation Between Murchison Minerals and Big Ridge

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

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

Diversification Opportunities for Murchison Minerals and Big Ridge

0.19

Correlation Coefficient

Murchison Minerals  Big Ridge

Average diversification

The 3 months correlation between Murchison and Big is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Murchison Minerals and Big Ridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Ridge Gold and Murchison Minerals 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 Murchison Minerals are associated (or correlated) with Big Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Ridge Gold has no effect on the direction of Murchison Minerals i.e., Murchison Minerals and Big Ridge go up and down completely randomly.

Pair Corralation between Murchison Minerals and Big Ridge

Assuming the 90 days horizon Murchison Minerals is expected to generate 4.63 times more return on investment than Big Ridge. However, Murchison Minerals is 4.63 times more volatile than Big Ridge Gold. It trades about 0.08 of its potential returns per unit of risk. Big Ridge Gold is currently generating about -0.1 per unit of risk. If you would invest  1.50  in Murchison Minerals on September 21, 2024 and sell it today you would earn a total of  0.00  from holding Murchison Minerals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Murchison Minerals  vs.  Big Ridge Gold

Murchison Minerals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Murchison Minerals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Murchison Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Big Ridge Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Big Ridge Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Big Ridge may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Murchison Minerals and Big Ridge

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

The idea behind Murchison Minerals and Big Ridge Gold 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..