Correlation Between Thunder Mountain and Brixton Metals

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

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

Diversification Opportunities for Thunder Mountain and Brixton Metals

-0.76

Correlation Coefficient

Thunder Mountain  Brixton Metals

Pay attention - limited upside

The 3 months correlation between Thunder and Brixton is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Thunder Mountain Gold and Brixton Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brixton Metals and Thunder 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 Thunder Mountain Gold are associated (or correlated) with Brixton Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brixton Metals has no effect on the direction of Thunder Mountain i.e., Thunder Mountain and Brixton Metals go up and down completely randomly.

Pair Corralation between Thunder Mountain and Brixton Metals

Given the investment horizon of 90 days Thunder Mountain Gold is expected to generate 3.96 times more return on investment than Brixton Metals. However, Thunder Mountain is 3.96 times more volatile than Brixton Metals. It trades about 0.16 of its potential returns per unit of risk. Brixton Metals is currently generating about -0.11 per unit of risk. If you would invest  4.40  in Thunder Mountain Gold on October 8, 2024 and sell it today you would earn a total of  5.60  from holding Thunder Mountain Gold or generate 127.27% return on investment over 90 days.

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

Thunder Mountain Gold  vs.  Brixton Metals

Thunder Mountain Gold

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thunder Mountain Gold are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating primary indicators, Thunder Mountain reported solid returns over the last few months and may actually be approaching a breakup point.

Brixton Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brixton Metals 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.

Pair Trading with Thunder Mountain and Brixton Metals

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

The idea behind Thunder Mountain Gold and Brixton Metals 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.