Correlation Between Caledonia Mining and Morgan Advanced
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining and Morgan Advanced 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 Morgan Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and Morgan Advanced Materials, you can compare the effects of market volatilities on Caledonia Mining and Morgan Advanced 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 Morgan Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Morgan Advanced.
Diversification Opportunities for Caledonia Mining and Morgan Advanced
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caledonia and Morgan is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Morgan Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Advanced Materials 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 Morgan Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Advanced Materials has no effect on the direction of Caledonia Mining i.e., Caledonia Mining and Morgan Advanced go up and down completely randomly.
Pair Corralation between Caledonia Mining and Morgan Advanced
Assuming the 90 days trading horizon Caledonia Mining is expected to generate 1.5 times more return on investment than Morgan Advanced. However, Caledonia Mining is 1.5 times more volatile than Morgan Advanced Materials. It trades about 0.01 of its potential returns per unit of risk. Morgan Advanced Materials is currently generating about 0.0 per unit of risk. If you would invest 85,610 in Caledonia Mining on September 12, 2024 and sell it today you would lose (1,110) from holding Caledonia Mining or give up 1.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caledonia Mining vs. Morgan Advanced Materials
Performance |
| Timeline |
| Caledonia Mining |
| Morgan Advanced Materials |
Caledonia Mining and Morgan Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Morgan Advanced
The main advantage of trading using opposite Caledonia Mining and Morgan Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining position performs unexpectedly, Morgan Advanced 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 Morgan Advanced will offset losses from the drop in Morgan Advanced's long position.| Caledonia Mining vs. Smithson Investment Trust | Caledonia Mining vs. Lowland Investment Co | Caledonia Mining vs. Monster Beverage Corp | Caledonia Mining vs. Oakley Capital Investments |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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