Correlation Between Monarca Minerals and Mexican Gold

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

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

Diversification Opportunities for Monarca Minerals and Mexican Gold

-0.08

Correlation Coefficient

Monarca Minerals  Mexican Gold

Good diversification

The 3 months correlation between Monarca and Mexican is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Monarca Minerals and Mexican Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mexican Gold Mining and Monarca 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 Monarca Minerals are associated (or correlated) with Mexican Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mexican Gold Mining has no effect on the direction of Monarca Minerals i.e., Monarca Minerals and Mexican Gold go up and down completely randomly.

Pair Corralation between Monarca Minerals and Mexican Gold

Assuming the 90 days horizon Monarca Minerals is expected to generate 0.91 times more return on investment than Mexican Gold. However, Monarca Minerals is 1.09 times less risky than Mexican Gold. It trades about 0.14 of its potential returns per unit of risk. Mexican Gold Mining is currently generating about -0.32 per unit of risk. If you would invest  0.40  in Monarca Minerals on September 4, 2024 and sell it today you would earn a total of  0.09  from holding Monarca Minerals or generate 22.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Monarca Minerals  vs.  Mexican Gold Mining

Monarca Minerals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monarca Minerals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Monarca Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Mexican Gold Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mexican Gold Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Monarca Minerals and Mexican Gold

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

The idea behind Monarca Minerals and Mexican Gold Mining 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.