Correlation Between Valhi and I 80

Can any of the company-specific risk be diversified away by investing in both Valhi and I 80 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 Valhi and I 80 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Valhi Inc and I 80 Gold Corp, you can compare the effects of market volatilities on Valhi and I 80 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 Valhi with a short position of I 80. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valhi and I 80.

Diversification Opportunities for Valhi and I 80

0.61

Correlation Coefficient

Valhi  I 80

Poor diversification

The 3 months correlation between Valhi and IAUX is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Valhi Inc and I 80 Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I 80 Gold and Valhi 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 Valhi Inc are associated (or correlated) with I 80. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I 80 Gold has no effect on the direction of Valhi i.e., Valhi and I 80 go up and down completely randomly.

Pair Corralation between Valhi and I 80

Considering the 90-day investment horizon Valhi Inc is expected to generate 0.55 times more return on investment than I 80. However, Valhi Inc is 1.82 times less risky than I 80. It trades about -0.01 of its potential returns per unit of risk. I 80 Gold Corp is currently generating about -0.02 per unit of risk. If you would invest  2,935  in Valhi Inc on September 3, 2024 and sell it today you would lose (375.00) from holding Valhi Inc or give up 12.78% of portfolio value over 90 days.

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

Valhi Inc  vs.  I 80 Gold Corp

Valhi Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valhi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Valhi is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

I 80 Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days I 80 Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Valhi and I 80

The main advantage of trading using opposite Valhi and I 80 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valhi position performs unexpectedly, I 80 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 I 80 will offset losses from the drop in I 80's long position.

The idea behind Valhi Inc and I 80 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.