Correlation Between Cabral Gold and Independence Gold
Can any of the company-specific risk be diversified away by investing in both Cabral Gold and Independence Gold 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 Cabral Gold and Independence Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cabral Gold and Independence Gold Corp, you can compare the effects of market volatilities on Cabral Gold and Independence Gold 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 Cabral Gold with a short position of Independence Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cabral Gold and Independence Gold.
Diversification Opportunities for Cabral Gold and Independence Gold
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cabral and Independence is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Cabral Gold and Independence Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independence Gold Corp and Cabral Gold 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 Cabral Gold are associated (or correlated) with Independence Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independence Gold Corp has no effect on the direction of Cabral Gold i.e., Cabral Gold and Independence Gold go up and down completely randomly.
Pair Corralation between Cabral Gold and Independence Gold
Assuming the 90 days horizon Cabral Gold is expected to generate 1.96 times more return on investment than Independence Gold. However, Cabral Gold is 1.96 times more volatile than Independence Gold Corp. It trades about -0.02 of its potential returns per unit of risk. Independence Gold Corp is currently generating about -0.25 per unit of risk. If you would invest 23.00 in Cabral Gold on August 26, 2024 and sell it today you would lose (3.00) from holding Cabral Gold or give up 13.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cabral Gold vs. Independence Gold Corp
Performance |
| Timeline |
| Cabral Gold |
| Independence Gold Corp |
Cabral Gold and Independence Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cabral Gold and Independence Gold
The main advantage of trading using opposite Cabral Gold and Independence Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cabral Gold position performs unexpectedly, Independence Gold 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 Independence Gold will offset losses from the drop in Independence Gold's long position.| Cabral Gold vs. Aurion Resources | Cabral Gold vs. Liberty Gold Corp | Cabral Gold vs. Orezone Gold Corp | Cabral Gold vs. Radisson Mining Resources |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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