Correlation Between GoldMining and Southern Copper
Can any of the company-specific risk be diversified away by investing in both GoldMining and Southern Copper 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 Southern Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Southern Copper Corp, you can compare the effects of market volatilities on GoldMining and Southern Copper 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 Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Southern Copper.
Diversification Opportunities for GoldMining and Southern Copper
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between GoldMining and Southern is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Southern Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper Corp 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 Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper Corp has no effect on the direction of GoldMining i.e., GoldMining and Southern Copper go up and down completely randomly.
Pair Corralation between GoldMining and Southern Copper
Assuming the 90 days trading horizon GoldMining is expected to generate 1.7 times more return on investment than Southern Copper. However, GoldMining is 1.7 times more volatile than Southern Copper Corp. It trades about -0.16 of its potential returns per unit of risk. Southern Copper Corp is currently generating about -0.28 per unit of risk. If you would invest 131.00 in GoldMining on August 30, 2024 and sell it today you would lose (10.00) from holding GoldMining or give up 7.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 63.64% |
| Values | Daily Returns |
GoldMining vs. Southern Copper Corp
Performance |
| Timeline |
| GoldMining |
| Southern Copper Corp |
GoldMining and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Southern Copper
The main advantage of trading using opposite GoldMining and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Southern Copper 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 Southern Copper will offset losses from the drop in Southern Copper's long position.| GoldMining vs. Ross Stores | GoldMining vs. Zoom Video Communications | GoldMining vs. Cairo Communication SpA | GoldMining vs. Dalata Hotel Group |
| Southern Copper vs. Tungsten West PLC | Southern Copper vs. Argo Group Limited | Southern Copper vs. Hardide PLC | Southern Copper vs. Versarien 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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