Correlation Between Paramount Gold and International Tower

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

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

Diversification Opportunities for Paramount Gold and International Tower

0.77

Correlation Coefficient

Paramount Gold  International Tower

Poor diversification

The 3 months correlation between Paramount and International is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Gold Nevada and International Tower Hill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Tower Hill and Paramount 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 Paramount Gold Nevada are associated (or correlated) with International Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Tower Hill has no effect on the direction of Paramount Gold i.e., Paramount Gold and International Tower go up and down completely randomly.

Pair Corralation between Paramount Gold and International Tower

Considering the 90-day investment horizon Paramount Gold Nevada is expected to generate 0.72 times more return on investment than International Tower. However, Paramount Gold Nevada is 1.4 times less risky than International Tower. It trades about 0.15 of its potential returns per unit of risk. International Tower Hill is currently generating about 0.09 per unit of risk. If you would invest  48.00  in Paramount Gold Nevada on May 6, 2025 and sell it today you would earn a total of  16.00  from holding Paramount Gold Nevada or generate 33.33% return on investment over 90 days.

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

Paramount Gold Nevada  vs.  International Tower Hill

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 11 (%) 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.

International Tower Hill

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Tower Hill are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical indicators, International Tower displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paramount Gold and International Tower

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

The idea behind Paramount Gold Nevada and International Tower Hill 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.