Correlation Between Triple Flag and Brightrock Gold

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

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

Diversification Opportunities for Triple Flag and Brightrock Gold

0.4

Correlation Coefficient

Triple Flag  Brightrock Gold

Very weak diversification

The 3 months correlation between Triple and Brightrock is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Triple Flag Precious and Brightrock Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brightrock Gold Corp and Triple Flag 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 Triple Flag Precious are associated (or correlated) with Brightrock Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brightrock Gold Corp has no effect on the direction of Triple Flag i.e., Triple Flag and Brightrock Gold go up and down completely randomly.

Pair Corralation between Triple Flag and Brightrock Gold

Given the investment horizon of 90 days Triple Flag Precious is expected to under-perform the Brightrock Gold. But the stock apears to be less risky and, when comparing its historical volatility, Triple Flag Precious is 5.74 times less risky than Brightrock Gold. The stock trades about -0.19 of its potential returns per unit of risk. The Brightrock Gold Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  7.30  in Brightrock Gold Corp on October 15, 2024 and sell it today you would earn a total of  2.10  from holding Brightrock Gold Corp or generate 28.77% return on investment over 90 days.

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

Triple Flag Precious  vs.  Brightrock Gold Corp

Triple Flag Precious

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triple Flag Precious has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Triple Flag is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Brightrock Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brightrock Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Brightrock Gold is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Triple Flag and Brightrock Gold

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

The idea behind Triple Flag Precious and Brightrock 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.