Correlation Between Maven Brands and Rimrock Gold

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

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

Diversification Opportunities for Maven Brands and Rimrock Gold

0.1

Correlation Coefficient

Maven Brands  Rimrock Gold

Average diversification

The 3 months correlation between Maven and Rimrock is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Maven Brands and Rimrock Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rimrock Gold Corp and Maven Brands 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 Maven Brands are associated (or correlated) with Rimrock Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rimrock Gold Corp has no effect on the direction of Maven Brands i.e., Maven Brands and Rimrock Gold go up and down completely randomly.

Pair Corralation between Maven Brands and Rimrock Gold

Assuming the 90 days horizon Maven Brands is expected to under-perform the Rimrock Gold. In addition to that, Maven Brands is 1.18 times more volatile than Rimrock Gold Corp. It trades about -0.18 of its total potential returns per unit of risk. Rimrock Gold Corp is currently generating about 0.04 per unit of volatility. If you would invest  0.04  in Rimrock Gold Corp on October 8, 2024 and sell it today you would lose (0.01) from holding Rimrock Gold Corp or give up 25.0% of portfolio value over 90 days.

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

Maven Brands  vs.  Rimrock Gold Corp

Maven Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maven Brands 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 technical and fundamental 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.

Rimrock Gold Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rimrock Gold Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Rimrock Gold disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maven Brands and Rimrock Gold

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

The idea behind Maven Brands and Rimrock Gold Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.