Correlation Between GoldMining and Global Net
Can any of the company-specific risk be diversified away by investing in both GoldMining and Global Net 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 GoldMining and Global Net into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Global Net Lease, you can compare the effects of market volatilities on GoldMining and Global Net 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 GoldMining with a short position of Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Global Net.
Diversification Opportunities for GoldMining and Global Net
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between GoldMining and Global is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease and GoldMining 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 GoldMining are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of GoldMining i.e., GoldMining and Global Net go up and down completely randomly.
Pair Corralation between GoldMining and Global Net
Assuming the 90 days trading horizon GoldMining is expected to under-perform the Global Net. In addition to that, GoldMining is 1.52 times more volatile than Global Net Lease. It trades about -0.01 of its total potential returns per unit of risk. Global Net Lease is currently generating about 0.03 per unit of volatility. If you would invest 711.00 in Global Net Lease on September 1, 2024 and sell it today you would earn a total of 47.00 from holding Global Net Lease or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 50.77% |
| Values | Daily Returns |
GoldMining vs. Global Net Lease
Performance |
| Timeline |
| GoldMining |
| Global Net Lease |
GoldMining and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Global Net
The main advantage of trading using opposite GoldMining and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net's long position.| GoldMining vs. Greenroc Mining PLC | GoldMining vs. Silvercorp Metals | GoldMining vs. Sydbank | GoldMining vs. AMG Advanced Metallurgical |
| Global Net vs. GoldMining | Global Net vs. Porvair plc | Global Net vs. Norwegian Air Shuttle | Global Net vs. Science in Sport |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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