Correlation Between New World and Revival Gold

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

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

Diversification Opportunities for New World and Revival Gold

-0.01

Correlation Coefficient

New World  Revival Gold

Good diversification

The 3 months correlation between New and Revival is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding New World Gold and Revival Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revival Gold and New World 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 World Gold are associated (or correlated) with Revival Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revival Gold has no effect on the direction of New World i.e., New World and Revival Gold go up and down completely randomly.

Pair Corralation between New World and Revival Gold

Given the investment horizon of 90 days New World Gold is expected to generate 2.54 times more return on investment than Revival Gold. However, New World is 2.54 times more volatile than Revival Gold. It trades about 0.06 of its potential returns per unit of risk. Revival Gold is currently generating about 0.13 per unit of risk. If you would invest  0.01  in New World Gold on December 27, 2024 and sell it today you would earn a total of  0.00  from holding New World Gold or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

New World Gold  vs.  Revival Gold

New World Gold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in New World Gold are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, New World exhibited solid returns over the last few months and may actually be approaching a breakup point.

Revival Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Revival Gold are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Revival Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with New World and Revival Gold

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

The idea behind New World Gold and Revival 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..