Correlation Between Quartz Mountain and Xtra Gold

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

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

Diversification Opportunities for Quartz Mountain and Xtra Gold

0.37

Correlation Coefficient

Quartz Mountain  Xtra Gold

Weak diversification

The 3 months correlation between Quartz and Xtra is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Quartz Mountain Resources and Xtra Gold Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtra Gold Resources and Quartz Mountain 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 Quartz Mountain Resources are associated (or correlated) with Xtra Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtra Gold Resources has no effect on the direction of Quartz Mountain i.e., Quartz Mountain and Xtra Gold go up and down completely randomly.

Pair Corralation between Quartz Mountain and Xtra Gold

Assuming the 90 days horizon Quartz Mountain Resources is expected to generate 2.52 times more return on investment than Xtra Gold. However, Quartz Mountain is 2.52 times more volatile than Xtra Gold Resources Corp. It trades about 0.08 of its potential returns per unit of risk. Xtra Gold Resources Corp is currently generating about 0.11 per unit of risk. If you would invest  40.00  in Quartz Mountain Resources on October 23, 2024 and sell it today you would earn a total of  7.00  from holding Quartz Mountain Resources or generate 17.5% return on investment over 90 days.

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

Quartz Mountain Resources  vs.  Xtra Gold Resources Corp

Quartz Mountain Resources

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Quartz Mountain Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Quartz Mountain showed solid returns over the last few months and may actually be approaching a breakup point.

Xtra Gold Resources

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtra Gold Resources Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Xtra Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quartz Mountain and Xtra Gold

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

The idea behind Quartz Mountain Resources and Xtra Gold Resources Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.