Correlation Between Sequoia Financial and Resolute Mining

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

By analyzing existing cross correlation between Sequoia Financial Group and Resolute Mining, you can compare the effects of market volatilities on Sequoia Financial and Resolute Mining 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 Sequoia Financial with a short position of Resolute Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sequoia Financial and Resolute Mining.

Diversification Opportunities for Sequoia Financial and Resolute Mining

-0.72

Correlation Coefficient

Sequoia Financial  Resolute Mining

Pay attention - limited upside

The 3 months correlation between Sequoia and Resolute is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sequoia Financial Group and Resolute Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resolute Mining and Sequoia Financial 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 Sequoia Financial Group are associated (or correlated) with Resolute Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resolute Mining has no effect on the direction of Sequoia Financial i.e., Sequoia Financial and Resolute Mining go up and down completely randomly.

Pair Corralation between Sequoia Financial and Resolute Mining

Assuming the 90 days trading horizon Sequoia Financial is expected to generate 10.19 times less return on investment than Resolute Mining. But when comparing it to its historical volatility, Sequoia Financial Group is 1.55 times less risky than Resolute Mining. It trades about 0.01 of its potential returns per unit of risk. Resolute Mining is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Resolute Mining on December 22, 2024 and sell it today you would earn a total of  5.00  from holding Resolute Mining or generate 12.5% return on investment over 90 days.

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

Sequoia Financial Group  vs.  Resolute Mining

Sequoia Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sequoia Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sequoia Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Resolute Mining

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Resolute Mining are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Resolute Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sequoia Financial and Resolute Mining

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

The idea behind Sequoia Financial Group and Resolute Mining 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.