Correlation Between Sitka Gold and Eloro Resources

Can any of the company-specific risk be diversified away by investing in both Sitka Gold and Eloro Resources 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 Eloro Resources 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 Eloro Resources, you can compare the effects of market volatilities on Sitka Gold and Eloro Resources 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 Eloro Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitka Gold and Eloro Resources.

Diversification Opportunities for Sitka Gold and Eloro Resources

-0.28

Correlation Coefficient

Sitka Gold  Eloro Resources

Very good diversification

The 3 months correlation between Sitka and Eloro is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sitka Gold Corp and Eloro Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eloro Resources 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 Eloro Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eloro Resources has no effect on the direction of Sitka Gold i.e., Sitka Gold and Eloro Resources go up and down completely randomly.

Pair Corralation between Sitka Gold and Eloro Resources

Assuming the 90 days horizon Sitka Gold Corp is expected to under-perform the Eloro Resources. In addition to that, Sitka Gold is 1.17 times more volatile than Eloro Resources. It trades about 0.0 of its total potential returns per unit of risk. Eloro Resources is currently generating about 0.0 per unit of volatility. If you would invest  70.00  in Eloro Resources on December 4, 2024 and sell it today you would lose (3.00) from holding Eloro Resources or give up 4.29% of portfolio value over 90 days.

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

Sitka Gold Corp  vs.  Eloro Resources

Sitka Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sitka Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Sitka Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Eloro Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eloro Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Eloro Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sitka Gold and Eloro Resources

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

The idea behind Sitka Gold Corp and Eloro Resources 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.