Correlation Between Vista Gold and Paramount Gold

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

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

Diversification Opportunities for Vista Gold and Paramount Gold

0.12

Correlation Coefficient

Vista Gold  Paramount Gold

Average diversification

The 3 months correlation between Vista and Paramount is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Vista Gold and Paramount Gold Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Gold Nevada 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 Paramount Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Gold Nevada has no effect on the direction of Vista Gold i.e., Vista Gold and Paramount Gold go up and down completely randomly.

Pair Corralation between Vista Gold and Paramount Gold

Considering the 90-day investment horizon Vista Gold is expected to generate 0.98 times more return on investment than Paramount Gold. However, Vista Gold is 1.02 times less risky than Paramount Gold. It trades about 0.07 of its potential returns per unit of risk. Paramount Gold Nevada is currently generating about -0.08 per unit of risk. If you would invest  61.00  in Vista Gold on November 28, 2024 and sell it today you would earn a total of  2.78  from holding Vista Gold or generate 4.56% return on investment over 90 days.

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

Vista Gold  vs.  Paramount Gold Nevada

Vista Gold

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vista Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Vista Gold is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Paramount Gold Nevada

Risk-Adjusted Performance

Very Weak

Over the last 90 days Paramount Gold Nevada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Vista Gold and Paramount Gold

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

The idea behind Vista Gold and Paramount Gold Nevada 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.