Correlation Between New Gold and Vista Gold

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

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

Diversification Opportunities for New Gold and Vista Gold

0.52

Correlation Coefficient

New Gold  Vista Gold

Very weak diversification

The 3 months correlation between New and Vista is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding New Gold and Vista Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Gold and New 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 New Gold are associated (or correlated) with Vista Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Gold has no effect on the direction of New Gold i.e., New Gold and Vista Gold go up and down completely randomly.

Pair Corralation between New Gold and Vista Gold

Considering the 90-day investment horizon New Gold is expected to generate 1.25 times more return on investment than Vista Gold. However, New Gold is 1.25 times more volatile than Vista Gold. It trades about 0.14 of its potential returns per unit of risk. Vista Gold is currently generating about 0.11 per unit of risk. If you would invest  253.00  in New Gold on September 16, 2024 and sell it today you would earn a total of  24.00  from holding New Gold or generate 9.49% return on investment over 90 days.

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

New Gold  vs.  Vista Gold

New Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Vista Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vista Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with New Gold and Vista Gold

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

The idea behind New Gold and Vista 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.