Correlation Between Spotify Technology and GoldMining
Can any of the company-specific risk be diversified away by investing in both Spotify Technology and GoldMining 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 Spotify Technology and GoldMining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spotify Technology SA and GoldMining, you can compare the effects of market volatilities on Spotify Technology and GoldMining 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 Spotify Technology with a short position of GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and GoldMining.
Diversification Opportunities for Spotify Technology and GoldMining
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Spotify and GoldMining is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and Spotify Technology 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 Spotify Technology SA are associated (or correlated) with GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Spotify Technology i.e., Spotify Technology and GoldMining go up and down completely randomly.
Pair Corralation between Spotify Technology and GoldMining
Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 1.42 times more return on investment than GoldMining. However, Spotify Technology is 1.42 times more volatile than GoldMining. It trades about 0.26 of its potential returns per unit of risk. GoldMining is currently generating about -0.24 per unit of risk. If you would invest 43,280 in Spotify Technology SA on October 30, 2024 and sell it today you would earn a total of 5,315 from holding Spotify Technology SA or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 55.0% |
| Values | Daily Returns |
Spotify Technology SA vs. GoldMining
Performance |
| Timeline |
| Spotify Technology |
| GoldMining |
Spotify Technology and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spotify Technology and GoldMining
The main advantage of trading using opposite Spotify Technology and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| Spotify Technology vs. Berkshire Hathaway | Spotify Technology vs. Samsung Electronics Co | Spotify Technology vs. Samsung Electronics Co | Spotify Technology vs. Chocoladefabriken Lindt Spruengli |
| GoldMining vs. Leroy Seafood Group | GoldMining vs. LPKF Laser Electronics | GoldMining vs. Roebuck Food Group | GoldMining vs. Premier Foods PLC |
Check out your portfolio center.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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