Correlation Between Bravada Gold and Paramount Gold

Can any of the company-specific risk be diversified away by investing in both Bravada 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 Bravada 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 Bravada Gold and Paramount Gold Nevada, you can compare the effects of market volatilities on Bravada 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 Bravada Gold with a short position of Paramount Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bravada Gold and Paramount Gold.

Diversification Opportunities for Bravada Gold and Paramount Gold

0.71

Correlation Coefficient

Bravada Gold  Paramount Gold

Poor diversification

The 3 months correlation between Bravada and Paramount is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bravada 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 Bravada 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 Bravada 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 Bravada Gold i.e., Bravada Gold and Paramount Gold go up and down completely randomly.

Pair Corralation between Bravada Gold and Paramount Gold

Assuming the 90 days horizon Bravada Gold is expected to generate 2.47 times more return on investment than Paramount Gold. However, Bravada Gold is 2.47 times more volatile than Paramount Gold Nevada. It trades about 0.1 of its potential returns per unit of risk. Paramount Gold Nevada is currently generating about 0.17 per unit of risk. If you would invest  2.53  in Bravada Gold on May 5, 2025 and sell it today you would earn a total of  1.07  from holding Bravada Gold or generate 42.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Bravada Gold  vs.  Paramount Gold Nevada

Bravada Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bravada Gold are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Bravada Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Paramount Gold Nevada

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paramount Gold Nevada are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Paramount Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bravada Gold and Paramount Gold

The main advantage of trading using opposite Bravada Gold and Paramount Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bravada 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 Bravada 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.