Correlation Between True North and Minaurum Gold

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

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

Diversification Opportunities for True North and Minaurum Gold

0.69

Correlation Coefficient

True North  Minaurum Gold

Poor diversification

The 3 months correlation between True and Minaurum is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding True North Gems and Minaurum Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minaurum Gold and True North 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 True North Gems are associated (or correlated) with Minaurum Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minaurum Gold has no effect on the direction of True North i.e., True North and Minaurum Gold go up and down completely randomly.

Pair Corralation between True North and Minaurum Gold

Assuming the 90 days horizon True North Gems is expected to generate 2.86 times more return on investment than Minaurum Gold. However, True North is 2.86 times more volatile than Minaurum Gold. It trades about 0.11 of its potential returns per unit of risk. Minaurum Gold is currently generating about 0.01 per unit of risk. If you would invest  3.00  in True North Gems on September 3, 2024 and sell it today you would earn a total of  2.00  from holding True North Gems or generate 66.67% return on investment over 90 days.

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

True North Gems  vs.  Minaurum Gold

True North Gems

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in True North Gems are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, True North showed solid returns over the last few months and may actually be approaching a breakup point.

Minaurum Gold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Minaurum Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Minaurum Gold is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with True North and Minaurum Gold

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

The idea behind True North Gems and Minaurum Gold 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.