Correlation Between Tudor Gold and Tower Resources

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

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

Diversification Opportunities for Tudor Gold and Tower Resources

0.51

Correlation Coefficient

Tudor Gold  Tower Resources

Very weak diversification

The 3 months correlation between Tudor and Tower is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Tudor Gold Corp and Tower Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Resources and Tudor 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 Tudor Gold Corp are associated (or correlated) with Tower Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Resources has no effect on the direction of Tudor Gold i.e., Tudor Gold and Tower Resources go up and down completely randomly.

Pair Corralation between Tudor Gold and Tower Resources

Assuming the 90 days horizon Tudor Gold is expected to generate 2.43 times less return on investment than Tower Resources. But when comparing it to its historical volatility, Tudor Gold Corp is 1.84 times less risky than Tower Resources. It trades about 0.01 of its potential returns per unit of risk. Tower Resources is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Tower Resources on December 28, 2024 and sell it today you would lose (1.00) from holding Tower Resources or give up 7.14% of portfolio value over 90 days.

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

Tudor Gold Corp  vs.  Tower Resources

Tudor Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tudor Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tudor Gold is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tower Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tower Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Tower Resources 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 Tudor Gold and Tower Resources

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

The idea behind Tudor Gold Corp and Tower Resources 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.