Correlation Between Spanish Mountain and Nighthawk Gold

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

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

Diversification Opportunities for Spanish Mountain and Nighthawk Gold

0.16

Correlation Coefficient

Spanish Mountain  Nighthawk Gold

Average diversification

The 3 months correlation between Spanish and Nighthawk is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Spanish Mountain Gold and Nighthawk Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nighthawk Gold Corp and Spanish Mountain 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 Spanish Mountain Gold are associated (or correlated) with Nighthawk Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nighthawk Gold Corp has no effect on the direction of Spanish Mountain i.e., Spanish Mountain and Nighthawk Gold go up and down completely randomly.

Pair Corralation between Spanish Mountain and Nighthawk Gold

If you would invest  7.00  in Spanish Mountain Gold on October 22, 2024 and sell it today you would earn a total of  0.00  from holding Spanish Mountain Gold or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.56%
Values	Daily Returns

Spanish Mountain Gold  vs.  Nighthawk Gold Corp

Spanish Mountain Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spanish Mountain Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Nighthawk Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Spanish Mountain and Nighthawk Gold

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

The idea behind Spanish Mountain Gold and Nighthawk Gold 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.