Correlation Between Caledonia Mining and Hershey
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining and Hershey 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 Caledonia Mining and Hershey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and Hershey Co, you can compare the effects of market volatilities on Caledonia Mining and Hershey 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 Caledonia Mining with a short position of Hershey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Hershey.
Diversification Opportunities for Caledonia Mining and Hershey
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Caledonia and Hershey is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Hershey Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hershey and Caledonia Mining 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 Caledonia Mining are associated (or correlated) with Hershey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hershey has no effect on the direction of Caledonia Mining i.e., Caledonia Mining and Hershey go up and down completely randomly.
Pair Corralation between Caledonia Mining and Hershey
Assuming the 90 days trading horizon Caledonia Mining is expected to under-perform the Hershey. In addition to that, Caledonia Mining is 1.61 times more volatile than Hershey Co. It trades about -0.02 of its total potential returns per unit of risk. Hershey Co is currently generating about -0.03 per unit of volatility. If you would invest 20,676 in Hershey Co on October 15, 2024 and sell it today you would lose (4,667) from holding Hershey Co or give up 22.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.59% |
| Values | Daily Returns |
Caledonia Mining vs. Hershey Co
Performance |
| Timeline |
| Caledonia Mining |
| Hershey |
Caledonia Mining and Hershey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Hershey
The main advantage of trading using opposite Caledonia Mining and Hershey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining position performs unexpectedly, Hershey 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 Hershey will offset losses from the drop in Hershey's long position.| Caledonia Mining vs. Blackrock World Mining | Caledonia Mining vs. International Consolidated Airlines | Caledonia Mining vs. Jacquet Metal Service | Caledonia Mining vs. Empire Metals Limited |
| Hershey vs. Verizon Communications | Hershey vs. Universal Display Corp | Hershey vs. Europa Metals | Hershey vs. Empire Metals Limited |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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