Correlation Between Regis Resources and Headwater Gold

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

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

Diversification Opportunities for Regis Resources and Headwater Gold

-0.37

Correlation Coefficient

Regis Resources  Headwater Gold

Very good diversification

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

Pair Corralation between Regis Resources and Headwater Gold

Assuming the 90 days horizon Regis Resources is expected to generate 0.7 times more return on investment than Headwater Gold. However, Regis Resources is 1.42 times less risky than Headwater Gold. It trades about 0.14 of its potential returns per unit of risk. Headwater Gold is currently generating about 0.01 per unit of risk. If you would invest  154.00  in Regis Resources on December 30, 2024 and sell it today you would earn a total of  77.00  from holding Regis Resources or generate 50.0% return on investment over 90 days.

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

Regis Resources  vs.  Headwater Gold

Regis Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Regis Resources are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Regis Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Headwater Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Headwater Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Headwater Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Regis Resources and Headwater Gold

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

The idea behind Regis Resources and Headwater 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.