Correlation Between Champion Iron and GoGold Resources
Can any of the company-specific risk be diversified away by investing in both Champion Iron and GoGold Resources 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 Champion Iron and GoGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and GoGold Resources, you can compare the effects of market volatilities on Champion Iron and GoGold Resources 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 Champion Iron with a short position of GoGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and GoGold Resources.
Diversification Opportunities for Champion Iron and GoGold Resources
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Champion and GoGold is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and GoGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoGold Resources and Champion Iron 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 Champion Iron are associated (or correlated) with GoGold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoGold Resources has no effect on the direction of Champion Iron i.e., Champion Iron and GoGold Resources go up and down completely randomly.
Pair Corralation between Champion Iron and GoGold Resources
Assuming the 90 days trading horizon Champion Iron is expected to generate 0.76 times more return on investment than GoGold Resources. However, Champion Iron is 1.31 times less risky than GoGold Resources. It trades about -0.02 of its potential returns per unit of risk. GoGold Resources is currently generating about -0.02 per unit of risk. If you would invest 583.00 in Champion Iron on September 3, 2024 and sell it today you would lose (63.00) from holding Champion Iron or give up 10.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Iron vs. GoGold Resources
Performance |
| Timeline |
| Champion Iron |
| GoGold Resources |
Champion Iron and GoGold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and GoGold Resources
The main advantage of trading using opposite Champion Iron and GoGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron position performs unexpectedly, GoGold Resources 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 GoGold Resources will offset losses from the drop in GoGold Resources' long position.| Champion Iron vs. Black Iron | Champion Iron vs. Wesdome Gold Mines | Champion Iron vs. GoGold Resources | Champion Iron vs. Mason Graphite |
| GoGold Resources vs. Algoma Steel Group | GoGold Resources vs. Champion Iron | GoGold Resources vs. International Zeolite Corp | GoGold Resources vs. European Residential Real |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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