Correlation Between GoldMining and Goodwin PLC
Can any of the company-specific risk be diversified away by investing in both GoldMining and Goodwin PLC 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 Goodwin PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Goodwin PLC, you can compare the effects of market volatilities on GoldMining and Goodwin PLC 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 Goodwin PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Goodwin PLC.
Diversification Opportunities for GoldMining and Goodwin PLC
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GoldMining and Goodwin is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Goodwin PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodwin PLC 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 Goodwin PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodwin PLC has no effect on the direction of GoldMining i.e., GoldMining and Goodwin PLC go up and down completely randomly.
Pair Corralation between GoldMining and Goodwin PLC
Assuming the 90 days trading horizon GoldMining is expected to under-perform the Goodwin PLC. In addition to that, GoldMining is 1.12 times more volatile than Goodwin PLC. It trades about -0.05 of its total potential returns per unit of risk. Goodwin PLC is currently generating about 0.02 per unit of volatility. If you would invest 684,000 in Goodwin PLC on September 3, 2024 and sell it today you would earn a total of 2,000 from holding Goodwin PLC or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 65.12% |
| Values | Daily Returns |
GoldMining vs. Goodwin PLC
Performance |
| Timeline |
| GoldMining |
| Goodwin PLC |
GoldMining and Goodwin PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Goodwin PLC
The main advantage of trading using opposite GoldMining and Goodwin PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Goodwin PLC 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 Goodwin PLC will offset losses from the drop in Goodwin PLC's long position.| GoldMining vs. Catalyst Media Group | GoldMining vs. CATLIN GROUP | GoldMining vs. Magnora ASA | GoldMining vs. RTW Venture Fund |
| Goodwin PLC vs. MoneysupermarketCom Group PLC | Goodwin PLC vs. Applied Materials | Goodwin PLC vs. GoldMining | Goodwin PLC vs. Morgan Advanced Materials |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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