Correlation Between GoldMining and Ceiba Investments
Can any of the company-specific risk be diversified away by investing in both GoldMining and Ceiba Investments 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 Ceiba Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Ceiba Investments, you can compare the effects of market volatilities on GoldMining and Ceiba Investments 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 Ceiba Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Ceiba Investments.
Diversification Opportunities for GoldMining and Ceiba Investments
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GoldMining and Ceiba is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Ceiba Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceiba Investments 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 Ceiba Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceiba Investments has no effect on the direction of GoldMining i.e., GoldMining and Ceiba Investments go up and down completely randomly.
Pair Corralation between GoldMining and Ceiba Investments
Assuming the 90 days trading horizon GoldMining is expected to generate 5.34 times more return on investment than Ceiba Investments. However, GoldMining is 5.34 times more volatile than Ceiba Investments. It trades about -0.03 of its potential returns per unit of risk. Ceiba Investments is currently generating about -0.21 per unit of risk. If you would invest 127.00 in GoldMining on September 12, 2024 and sell it today you would lose (2.00) from holding GoldMining or give up 1.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 68.18% |
| Values | Daily Returns |
GoldMining vs. Ceiba Investments
Performance |
| Timeline |
| GoldMining |
| Ceiba Investments |
GoldMining and Ceiba Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Ceiba Investments
The main advantage of trading using opposite GoldMining and Ceiba Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Ceiba Investments 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 Ceiba Investments will offset losses from the drop in Ceiba Investments' long position.| GoldMining vs. Hong Kong Land | GoldMining vs. Neometals | GoldMining vs. Coor Service Management | GoldMining vs. Fidelity Sustainable USD |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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