Correlation Between Revival Gold and Montage Gold

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

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

Diversification Opportunities for Revival Gold and Montage Gold

0.64

Correlation Coefficient

Revival Gold  Montage Gold

Poor diversification

The 3 months correlation between Revival and Montage is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Revival Gold and Montage Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montage Gold Corp and Revival 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 Revival Gold are associated (or correlated) with Montage Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montage Gold Corp has no effect on the direction of Revival Gold i.e., Revival Gold and Montage Gold go up and down completely randomly.

Pair Corralation between Revival Gold and Montage Gold

Assuming the 90 days horizon Revival Gold is expected to generate 2.05 times more return on investment than Montage Gold. However, Revival Gold is 2.05 times more volatile than Montage Gold Corp. It trades about 0.22 of its potential returns per unit of risk. Montage Gold Corp is currently generating about 0.06 per unit of risk. If you would invest  18.00  in Revival Gold on December 4, 2024 and sell it today you would earn a total of  5.00  from holding Revival Gold or generate 27.78% return on investment over 90 days.

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

Revival Gold  vs.  Montage Gold Corp

Revival Gold

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Revival Gold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Revival Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Montage Gold Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Montage Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Montage 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 Revival Gold and Montage Gold

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

The idea behind Revival Gold and Montage Gold 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.