Correlation Between Sitka Gold and Bayview Acquisition

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

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

Diversification Opportunities for Sitka Gold and Bayview Acquisition

0.72

Correlation Coefficient

Sitka Gold  Bayview Acquisition

Poor diversification

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

Pair Corralation between Sitka Gold and Bayview Acquisition

Assuming the 90 days horizon Sitka Gold Corp is expected to generate 0.74 times more return on investment than Bayview Acquisition. However, Sitka Gold Corp is 1.35 times less risky than Bayview Acquisition. It trades about 0.16 of its potential returns per unit of risk. Bayview Acquisition Corp is currently generating about -0.02 per unit of risk. If you would invest  18.00  in Sitka Gold Corp on September 2, 2024 and sell it today you would earn a total of  14.00  from holding Sitka Gold Corp or generate 77.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	38.46%
Values	Daily Returns

Sitka Gold Corp  vs.  Bayview Acquisition Corp

Sitka Gold Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sitka Gold Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Sitka Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Bayview Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bayview Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Sitka Gold and Bayview Acquisition

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

The idea behind Sitka Gold Corp and Bayview Acquisition 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.