Correlation Between Vista Gold and MDA

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

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

Diversification Opportunities for Vista Gold and MDA

-0.37

Correlation Coefficient

Vista Gold  MDA

Very good diversification

The 3 months correlation between Vista and MDA is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Vista Gold and MDA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDA and Vista 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 Vista Gold are associated (or correlated) with MDA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDA has no effect on the direction of Vista Gold i.e., Vista Gold and MDA go up and down completely randomly.

Pair Corralation between Vista Gold and MDA

Assuming the 90 days trading horizon Vista Gold is expected to generate 0.9 times more return on investment than MDA. However, Vista Gold is 1.11 times less risky than MDA. It trades about 0.15 of its potential returns per unit of risk. MDA is currently generating about 0.01 per unit of risk. If you would invest  83.00  in Vista Gold on December 20, 2024 and sell it today you would earn a total of  29.00  from holding Vista Gold or generate 34.94% return on investment over 90 days.

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

Vista Gold  vs.  MDA

Vista Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vista Gold are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Vista Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

MDA

Risk-Adjusted Performance

Very Weak

Over the last 90 days MDA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, MDA is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vista Gold and MDA

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

The idea behind Vista Gold and MDA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.