Correlation Between Seabridge Gold and Paramount Gold

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

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

Diversification Opportunities for Seabridge Gold and Paramount Gold

0.49

Correlation Coefficient

Seabridge Gold  Paramount Gold

Very weak diversification

The 3 months correlation between Seabridge and Paramount is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Seabridge Gold and Paramount Gold Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Gold Nevada and Seabridge 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 Seabridge Gold are associated (or correlated) with Paramount Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Gold Nevada has no effect on the direction of Seabridge Gold i.e., Seabridge Gold and Paramount Gold go up and down completely randomly.

Pair Corralation between Seabridge Gold and Paramount Gold

Allowing for the 90-day total investment horizon Seabridge Gold is expected to under-perform the Paramount Gold. But the stock apears to be less risky and, when comparing its historical volatility, Seabridge Gold is 1.27 times less risky than Paramount Gold. The stock trades about -0.12 of its potential returns per unit of risk. The Paramount Gold Nevada is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  41.00  in Paramount Gold Nevada on November 28, 2024 and sell it today you would lose (6.00) from holding Paramount Gold Nevada or give up 14.63% of portfolio value over 90 days.

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

Seabridge Gold  vs.  Paramount Gold Nevada

Seabridge Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seabridge Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Paramount Gold Nevada

Risk-Adjusted Performance

Very Weak

Over the last 90 days Paramount Gold Nevada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Seabridge Gold and Paramount Gold

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

The idea behind Seabridge Gold and Paramount Gold Nevada 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.