Correlation Between US GoldMining and Scotch Creek

Can any of the company-specific risk be diversified away by investing in both US GoldMining and Scotch Creek 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 US GoldMining and Scotch Creek into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US GoldMining Warrant and Scotch Creek Ventures, you can compare the effects of market volatilities on US GoldMining and Scotch Creek 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 US GoldMining with a short position of Scotch Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of US GoldMining and Scotch Creek.

Diversification Opportunities for US GoldMining and Scotch Creek

-0.64

Correlation Coefficient

US GoldMining  Scotch Creek

Excellent diversification

The 3 months correlation between USGOW and Scotch is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding US GoldMining Warrant and Scotch Creek Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scotch Creek Ventures and US GoldMining 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 US GoldMining Warrant are associated (or correlated) with Scotch Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scotch Creek Ventures has no effect on the direction of US GoldMining i.e., US GoldMining and Scotch Creek go up and down completely randomly.

Pair Corralation between US GoldMining and Scotch Creek

Assuming the 90 days horizon US GoldMining Warrant is expected to generate 1.23 times more return on investment than Scotch Creek. However, US GoldMining is 1.23 times more volatile than Scotch Creek Ventures. It trades about 0.2 of its potential returns per unit of risk. Scotch Creek Ventures is currently generating about -0.07 per unit of risk. If you would invest  70.00  in US GoldMining Warrant on September 2, 2024 and sell it today you would earn a total of  169.00  from holding US GoldMining Warrant or generate 241.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	92.19%
Values	Daily Returns

US GoldMining Warrant  vs.  Scotch Creek Ventures

US GoldMining Warrant

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US GoldMining Warrant are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, US GoldMining showed solid returns over the last few months and may actually be approaching a breakup point.

Scotch Creek Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scotch Creek Ventures 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with US GoldMining and Scotch Creek

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

The idea behind US GoldMining Warrant and Scotch Creek Ventures 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.