Correlation Between GoldMining and Neometals
Can any of the company-specific risk be diversified away by investing in both GoldMining and Neometals 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 Neometals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Neometals, you can compare the effects of market volatilities on GoldMining and Neometals 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 Neometals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Neometals.
Diversification Opportunities for GoldMining and Neometals
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GoldMining and Neometals is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals 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 Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of GoldMining i.e., GoldMining and Neometals go up and down completely randomly.
Pair Corralation between GoldMining and Neometals
Assuming the 90 days trading horizon GoldMining is expected to generate 1.05 times more return on investment than Neometals. However, GoldMining is 1.05 times more volatile than Neometals. It trades about -0.03 of its potential returns per unit of risk. Neometals is currently generating about -0.1 per unit of risk. If you would invest 179.00 in GoldMining on August 28, 2024 and sell it today you would lose (60.00) from holding GoldMining or give up 33.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 35.34% |
| Values | Daily Returns |
GoldMining vs. Neometals
Performance |
| Timeline |
| GoldMining |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Neometals |
GoldMining and Neometals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Neometals
The main advantage of trading using opposite GoldMining and Neometals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Neometals 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 Neometals will offset losses from the drop in Neometals' long position.| GoldMining vs. Samsung Electronics Co | GoldMining vs. Samsung Electronics Co | GoldMining vs. Hyundai Motor | GoldMining vs. Toyota Motor Corp |
| Neometals vs. Givaudan SA | Neometals vs. Antofagasta PLC | Neometals vs. Centamin PLC | Neometals vs. Atalaya Mining |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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