Correlation Between Triple Flag and Buyer Group

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

Diversification Opportunities for Triple Flag and Buyer Group

-0.05

Correlation Coefficient

Triple Flag  Buyer Group

Good diversification

The 3 months correlation between Triple and Buyer is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Triple Flag Precious and Buyer Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buyer Group International 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 Buyer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buyer Group International has no effect on the direction of Triple Flag i.e., Triple Flag and Buyer Group go up and down completely randomly.

Pair Corralation between Triple Flag and Buyer Group

Given the investment horizon of 90 days Triple Flag is expected to generate 1.24 times less return on investment than Buyer Group. But when comparing it to its historical volatility, Triple Flag Precious is 3.95 times less risky than Buyer Group. It trades about 0.02 of its potential returns per unit of risk. Buyer Group International is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  0.51  in Buyer Group International on September 26, 2024 and sell it today you would lose (0.37) from holding Buyer Group International or give up 72.55% of portfolio value over 90 days.

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

Triple Flag Precious  vs.  Buyer Group International

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 latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Buyer Group International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Triple Flag and Buyer Group

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

The idea behind Triple Flag Precious and Buyer Group International 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.

Check out your portfolio center.

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.