Correlation Between Tonogold Resources and Blue Star

Can any of the company-specific risk be diversified away by investing in both Tonogold Resources and Blue Star 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 Tonogold Resources and Blue Star into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Tonogold Resources and Blue Star

-0.05

Correlation Coefficient

Tonogold Resources  Blue Star

Good diversification

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

Pair Corralation between Tonogold Resources and Blue Star

Given the investment horizon of 90 days Tonogold Resources is expected to generate 2.7 times less return on investment than Blue Star. In addition to that, Tonogold Resources is 1.94 times more volatile than Blue Star Gold. It trades about 0.04 of its total potential returns per unit of risk. Blue Star Gold is currently generating about 0.21 per unit of volatility. If you would invest  3.63  in Blue Star Gold on December 21, 2024 and sell it today you would earn a total of  5.17  from holding Blue Star Gold or generate 142.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Tonogold Resources  vs.  Blue Star Gold

Tonogold Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tonogold Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile technical and fundamental indicators, Tonogold Resources disclosed solid returns over the last few months and may actually be approaching a breakup point.

Blue Star Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Star Gold are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Blue Star reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tonogold Resources and Blue Star

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

The idea behind Tonogold Resources and Blue Star 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.