Correlation Between Rackla Metals and Leviathan Gold

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

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

Diversification Opportunities for Rackla Metals and Leviathan Gold

0.5

Correlation Coefficient

Rackla Metals  Leviathan Gold

Very weak diversification

The 3 months correlation between Rackla and Leviathan is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Rackla Metals and Leviathan Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leviathan Gold and Rackla Metals 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 Rackla Metals are associated (or correlated) with Leviathan Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leviathan Gold has no effect on the direction of Rackla Metals i.e., Rackla Metals and Leviathan Gold go up and down completely randomly.

Pair Corralation between Rackla Metals and Leviathan Gold

Assuming the 90 days horizon Rackla Metals is expected to generate 2.74 times more return on investment than Leviathan Gold. However, Rackla Metals is 2.74 times more volatile than Leviathan Gold. It trades about 0.14 of its potential returns per unit of risk. Leviathan Gold is currently generating about 0.18 per unit of risk. If you would invest  7.00  in Rackla Metals on December 29, 2024 and sell it today you would earn a total of  8.00  from holding Rackla Metals or generate 114.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Rackla Metals  vs.  Leviathan Gold

Rackla Metals

Risk-Adjusted Performance

Good

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

Leviathan Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Leviathan Gold are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Leviathan Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rackla Metals and Leviathan Gold

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

The idea behind Rackla Metals and Leviathan 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.