Correlation Between T Rowe and Hycroft Mining

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

By analyzing existing cross correlation between T Rowe Price and Hycroft Mining Holding, you can compare the effects of market volatilities on T Rowe and Hycroft Mining 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 T Rowe with a short position of Hycroft Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Hycroft Mining.

Diversification Opportunities for T Rowe and Hycroft Mining

0.28

Correlation Coefficient

T Rowe  Hycroft Mining

Modest diversification

The 3 months correlation between RRTLX and Hycroft is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Hycroft Mining Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hycroft Mining Holding and T Rowe 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 T Rowe Price are associated (or correlated) with Hycroft Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hycroft Mining Holding has no effect on the direction of T Rowe i.e., T Rowe and Hycroft Mining go up and down completely randomly.

Pair Corralation between T Rowe and Hycroft Mining

Assuming the 90 days horizon T Rowe is expected to generate 1.29 times less return on investment than Hycroft Mining. But when comparing it to its historical volatility, T Rowe Price is 13.92 times less risky than Hycroft Mining. It trades about 0.1 of its potential returns per unit of risk. Hycroft Mining Holding is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  601.00  in Hycroft Mining Holding on January 30, 2024 and sell it today you would lose (229.02) from holding Hycroft Mining Holding or give up 38.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.74%
Values	Daily Returns

T Rowe Price  vs.  Hycroft Mining Holding

T Rowe Price

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in T Rowe Price are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, T Rowe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hycroft Mining Holding

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hycroft Mining Holding are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Hycroft Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with T Rowe and Hycroft Mining

The main advantage of trading using opposite T Rowe and Hycroft Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, Hycroft Mining 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 Hycroft Mining will offset losses from the drop in Hycroft Mining's long position.

The idea behind T Rowe Price and Hycroft Mining Holding 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.