Correlation Between Q Gold and Imperial Metals

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

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

Diversification Opportunities for Q Gold and Imperial Metals

0.42

Correlation Coefficient

Q Gold  Imperial Metals

Very weak diversification

The 3 months correlation between QGR and Imperial is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Q Gold Resources and Imperial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Metals and Q 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 Q Gold Resources are associated (or correlated) with Imperial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Metals has no effect on the direction of Q Gold i.e., Q Gold and Imperial Metals go up and down completely randomly.

Pair Corralation between Q Gold and Imperial Metals

Assuming the 90 days horizon Q Gold Resources is expected to generate 3.42 times more return on investment than Imperial Metals. However, Q Gold is 3.42 times more volatile than Imperial Metals. It trades about 0.09 of its potential returns per unit of risk. Imperial Metals is currently generating about -0.05 per unit of risk. If you would invest  10.00  in Q Gold Resources on October 3, 2024 and sell it today you would earn a total of  4.00  from holding Q Gold Resources or generate 40.0% return on investment over 90 days.

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

Q Gold Resources  vs.  Imperial Metals

Q Gold Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Q Gold Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Imperial Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imperial Metals 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 forward indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Q Gold and Imperial Metals

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

The idea behind Q Gold Resources and Imperial Metals 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.