Correlation Between Centerra Gold and Cerrado Gold
Can any of the company-specific risk be diversified away by investing in both Centerra Gold and Cerrado 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 Centerra Gold and Cerrado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centerra Gold and Cerrado Gold, you can compare the effects of market volatilities on Centerra Gold and Cerrado 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 Centerra Gold with a short position of Cerrado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centerra Gold and Cerrado Gold.
Diversification Opportunities for Centerra Gold and Cerrado Gold
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Centerra and Cerrado is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Centerra Gold and Cerrado Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cerrado Gold and Centerra 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 Centerra Gold are associated (or correlated) with Cerrado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cerrado Gold has no effect on the direction of Centerra Gold i.e., Centerra Gold and Cerrado Gold go up and down completely randomly.
Pair Corralation between Centerra Gold and Cerrado Gold
Given the investment horizon of 90 days Centerra Gold is expected to generate 0.48 times more return on investment than Cerrado Gold. However, Centerra Gold is 2.1 times less risky than Cerrado Gold. It trades about -0.12 of its potential returns per unit of risk. Cerrado Gold is currently generating about -0.13 per unit of risk. If you would invest 632.00 in Centerra Gold on September 3, 2024 and sell it today you would lose (37.00) from holding Centerra Gold or give up 5.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centerra Gold vs. Cerrado Gold
Performance |
| Timeline |
| Centerra Gold |
| Cerrado Gold |
Centerra Gold and Cerrado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centerra Gold and Cerrado Gold
The main advantage of trading using opposite Centerra Gold and Cerrado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centerra Gold position performs unexpectedly, Cerrado 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 Cerrado Gold will offset losses from the drop in Cerrado Gold's long position.| Centerra Gold vs. Gold Fields Ltd | Centerra Gold vs. Eldorado Gold Corp | Centerra Gold vs. Osisko Gold Ro | Centerra Gold vs. SSR Mining |
| Cerrado Gold vs. Antioquia Gold | Cerrado Gold vs. Red Pine Exploration | Cerrado Gold vs. Bellevue Gold Limited | Cerrado Gold vs. Asante 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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