Correlation Between Thunder Gold and Legacy Education

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

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

Diversification Opportunities for Thunder Gold and Legacy Education

0.33

Correlation Coefficient

Thunder Gold  Legacy Education

Weak diversification

The 3 months correlation between Thunder and Legacy is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Thunder Gold Corp and Legacy Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legacy Education and Thunder 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 Thunder Gold Corp are associated (or correlated) with Legacy Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legacy Education has no effect on the direction of Thunder Gold i.e., Thunder Gold and Legacy Education go up and down completely randomly.

Pair Corralation between Thunder Gold and Legacy Education

Assuming the 90 days horizon Thunder Gold Corp is expected to generate 7.59 times more return on investment than Legacy Education. However, Thunder Gold is 7.59 times more volatile than Legacy Education. It trades about 0.11 of its potential returns per unit of risk. Legacy Education is currently generating about 0.01 per unit of risk. If you would invest  3.77  in Thunder Gold Corp on December 29, 2024 and sell it today you would earn a total of  0.58  from holding Thunder Gold Corp or generate 15.38% return on investment over 90 days.

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

Thunder Gold Corp  vs.  Legacy Education

Thunder Gold Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thunder Gold Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady essential indicators, Thunder Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Legacy Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Legacy Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Thunder Gold and Legacy Education

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

The idea behind Thunder Gold Corp and Legacy Education 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.