Correlation Between B2Gold Corp and Pan American
Can any of the company-specific risk be diversified away by investing in both B2Gold Corp and Pan American 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 B2Gold Corp and Pan American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B2Gold Corp and Pan American Silver, you can compare the effects of market volatilities on B2Gold Corp and Pan American 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 B2Gold Corp with a short position of Pan American. Check out your portfolio center. Please also check ongoing floating volatility patterns of B2Gold Corp and Pan American.
Diversification Opportunities for B2Gold Corp and Pan American
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between B2Gold and Pan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding B2Gold Corp and Pan American Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan American Silver and B2Gold Corp 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 B2Gold Corp are associated (or correlated) with Pan American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan American Silver has no effect on the direction of B2Gold Corp i.e., B2Gold Corp and Pan American go up and down completely randomly.
Pair Corralation between B2Gold Corp and Pan American
Considering the 90-day investment horizon B2Gold Corp is expected to under-perform the Pan American. But the stock apears to be less risky and, when comparing its historical volatility, B2Gold Corp is 1.12 times less risky than Pan American. The stock trades about 0.0 of its potential returns per unit of risk. The Pan American Silver is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,531 in Pan American Silver on August 26, 2024 and sell it today you would earn a total of 727.00 from holding Pan American Silver or generate 47.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
B2Gold Corp vs. Pan American Silver
Performance |
| Timeline |
| B2Gold Corp |
| Pan American Silver |
B2Gold Corp and Pan American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B2Gold Corp and Pan American
The main advantage of trading using opposite B2Gold Corp and Pan American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B2Gold Corp position performs unexpectedly, Pan American 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 Pan American will offset losses from the drop in Pan American's long position.| B2Gold Corp vs. Sandstorm Gold Ltd | B2Gold Corp vs. Kinross Gold | B2Gold Corp vs. Alamos Gold | B2Gold Corp vs. Fortuna Silver Mines |
| Pan American vs. Newmont Goldcorp Corp | Pan American vs. Wheaton Precious Metals | Pan American vs. Franco Nevada | Pan American vs. Kinross Gold |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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