Correlation Between Strikepoint Gold and New Age

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

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

Diversification Opportunities for Strikepoint Gold and New Age

0.61

Correlation Coefficient

Strikepoint Gold  New Age

Poor diversification

The 3 months correlation between Strikepoint and New is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Strikepoint Gold and New Age Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Age Metals and Strikepoint 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 Strikepoint Gold are associated (or correlated) with New Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Age Metals has no effect on the direction of Strikepoint Gold i.e., Strikepoint Gold and New Age go up and down completely randomly.

Pair Corralation between Strikepoint Gold and New Age

Assuming the 90 days horizon Strikepoint Gold is expected to generate 4.46 times less return on investment than New Age. In addition to that, Strikepoint Gold is 1.57 times more volatile than New Age Metals. It trades about 0.01 of its total potential returns per unit of risk. New Age Metals is currently generating about 0.05 per unit of volatility. If you would invest  8.00  in New Age Metals on September 5, 2024 and sell it today you would earn a total of  0.50  from holding New Age Metals or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Strikepoint Gold  vs.  New Age Metals

Strikepoint Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strikepoint Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unfluctuating basic indicators, Strikepoint Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

New Age Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in New Age Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, New Age showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Strikepoint Gold and New Age

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

The idea behind Strikepoint Gold and New Age Metals 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.