Correlation Between Pilbara Minerals and Bravada Gold

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

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

Diversification Opportunities for Pilbara Minerals and Bravada Gold

-0.11

Correlation Coefficient

Pilbara Minerals  Bravada Gold

Good diversification

The 3 months correlation between Pilbara and Bravada is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Pilbara Minerals Limited and Bravada Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravada Gold and Pilbara 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 Pilbara Minerals Limited are associated (or correlated) with Bravada Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravada Gold has no effect on the direction of Pilbara Minerals i.e., Pilbara Minerals and Bravada Gold go up and down completely randomly.

Pair Corralation between Pilbara Minerals and Bravada Gold

Assuming the 90 days horizon Pilbara Minerals Limited is expected to under-perform the Bravada Gold. But the pink sheet apears to be less risky and, when comparing its historical volatility, Pilbara Minerals Limited is 3.43 times less risky than Bravada Gold. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Bravada Gold is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1.02  in Bravada Gold on December 30, 2024 and sell it today you would earn a total of  1.38  from holding Bravada Gold or generate 135.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Pilbara Minerals Limited  vs.  Bravada Gold

Pilbara Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pilbara Minerals Limited 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 fundamental drivers remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Bravada Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bravada Gold are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bravada Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pilbara Minerals and Bravada Gold

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

The idea behind Pilbara Minerals Limited and Bravada 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.