Correlation Between Caledonia Mining and Cabral Gold
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining and Cabral 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 Caledonia Mining and Cabral Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and Cabral Gold, you can compare the effects of market volatilities on Caledonia Mining and Cabral 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 Caledonia Mining with a short position of Cabral Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Cabral Gold.
Diversification Opportunities for Caledonia Mining and Cabral Gold
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caledonia and Cabral is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Cabral Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabral Gold 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 Cabral Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabral Gold has no effect on the direction of Caledonia Mining i.e., Caledonia Mining and Cabral Gold go up and down completely randomly.
Pair Corralation between Caledonia Mining and Cabral Gold
Given the investment horizon of 90 days Caledonia Mining is expected to under-perform the Cabral Gold. But the stock apears to be less risky and, when comparing its historical volatility, Caledonia Mining is 2.78 times less risky than Cabral Gold. The stock trades about 0.0 of its potential returns per unit of risk. The Cabral Gold is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Cabral Gold on August 31, 2024 and sell it today you would earn a total of 6.00 from holding Cabral Gold or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caledonia Mining vs. Cabral Gold
Performance |
| Timeline |
| Caledonia Mining |
| Cabral Gold |
Caledonia Mining and Cabral Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Cabral Gold
The main advantage of trading using opposite Caledonia Mining and Cabral Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining position performs unexpectedly, Cabral 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 Cabral Gold will offset losses from the drop in Cabral Gold's long position.| Caledonia Mining vs. DRDGOLD Limited ADR | Caledonia Mining vs. Galiano Gold | Caledonia Mining vs. Mastech Holdings | Caledonia Mining vs. EMX Royalty Corp |
| Cabral Gold vs. Puma Exploration | Cabral Gold vs. Endurance Gold | Cabral Gold vs. Red Pine Exploration | Cabral Gold vs. Fremont 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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