Correlation Between Scottie Resources and Westward Gold

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

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

Diversification Opportunities for Scottie Resources and Westward Gold

-0.39

Correlation Coefficient

Scottie Resources  Westward Gold

Very good diversification

The 3 months correlation between Scottie and Westward is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Scottie Resources Corp and Westward Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westward Gold and Scottie Resources 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 Scottie Resources Corp are associated (or correlated) with Westward Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westward Gold has no effect on the direction of Scottie Resources i.e., Scottie Resources and Westward Gold go up and down completely randomly.

Pair Corralation between Scottie Resources and Westward Gold

Assuming the 90 days horizon Scottie Resources is expected to generate 19.8 times less return on investment than Westward Gold. But when comparing it to its historical volatility, Scottie Resources Corp is 1.78 times less risky than Westward Gold. It trades about 0.01 of its potential returns per unit of risk. Westward Gold is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  6.25  in Westward Gold on May 6, 2025 and sell it today you would earn a total of  3.39  from holding Westward Gold or generate 54.24% return on investment over 90 days.

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

Scottie Resources Corp  vs.  Westward Gold

Scottie Resources Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Scottie Resources Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Scottie Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Westward Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Westward Gold are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Westward Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scottie Resources and Westward Gold

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

The idea behind Scottie Resources Corp and Westward Gold 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.