Correlation Between Centerra Gold and First Mining
Can any of the company-specific risk be diversified away by investing in both Centerra Gold and First Mining 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 First Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centerra Gold and First Mining Gold, you can compare the effects of market volatilities on Centerra Gold and First Mining 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 First Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centerra Gold and First Mining.
Diversification Opportunities for Centerra Gold and First Mining
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Centerra and First is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Centerra Gold and First Mining Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mining 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 First Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mining Gold has no effect on the direction of Centerra Gold i.e., Centerra Gold and First Mining go up and down completely randomly.
Pair Corralation between Centerra Gold and First Mining
Given the investment horizon of 90 days Centerra Gold is expected to under-perform the First Mining. But the stock apears to be less risky and, when comparing its historical volatility, Centerra Gold is 1.99 times less risky than First Mining. The stock trades about -0.12 of its potential returns per unit of risk. The First Mining Gold is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 9.80 in First Mining Gold on September 3, 2024 and sell it today you would lose (0.65) from holding First Mining Gold or give up 6.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centerra Gold vs. First Mining Gold
Performance |
| Timeline |
| Centerra Gold |
| First Mining Gold |
Centerra Gold and First Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centerra Gold and First Mining
The main advantage of trading using opposite Centerra Gold and First Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centerra Gold position performs unexpectedly, First Mining 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 First Mining will offset losses from the drop in First Mining'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 |
| First Mining vs. Aurion Resources | First Mining vs. Orezone Gold Corp | First Mining vs. Rio2 Limited | First Mining vs. Norsemont 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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