Correlation Between Prosper Gold and Volcanic Gold

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

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

Diversification Opportunities for Prosper Gold and Volcanic Gold

-0.28

Correlation Coefficient

Prosper Gold  Volcanic Gold

Very good diversification

The 3 months correlation between Prosper and Volcanic is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Prosper Gold Corp and Volcanic Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volcanic Gold Mines and Prosper 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 Prosper Gold Corp are associated (or correlated) with Volcanic Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volcanic Gold Mines has no effect on the direction of Prosper Gold i.e., Prosper Gold and Volcanic Gold go up and down completely randomly.

Pair Corralation between Prosper Gold and Volcanic Gold

Assuming the 90 days horizon Prosper Gold Corp is expected to under-perform the Volcanic Gold. But the stock apears to be less risky and, when comparing its historical volatility, Prosper Gold Corp is 2.81 times less risky than Volcanic Gold. The stock trades about -0.05 of its potential returns per unit of risk. The Volcanic Gold Mines is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Volcanic Gold Mines on October 23, 2024 and sell it today you would earn a total of  6.00  from holding Volcanic Gold Mines or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Prosper Gold Corp  vs.  Volcanic Gold Mines

Prosper Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosper Gold Corp 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 basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Volcanic Gold Mines

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Volcanic Gold Mines are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Volcanic Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prosper Gold and Volcanic Gold

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

The idea behind Prosper Gold Corp and Volcanic Gold Mines 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.