Correlation Between Caledonia Mining and Snowline Gold
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining and Snowline 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 Snowline 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 Snowline Gold Corp, you can compare the effects of market volatilities on Caledonia Mining and Snowline 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 Snowline Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Snowline Gold.
Diversification Opportunities for Caledonia Mining and Snowline Gold
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caledonia and Snowline is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Snowline Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snowline Gold Corp 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 Snowline Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snowline Gold Corp has no effect on the direction of Caledonia Mining i.e., Caledonia Mining and Snowline Gold go up and down completely randomly.
Pair Corralation between Caledonia Mining and Snowline Gold
Given the investment horizon of 90 days Caledonia Mining is expected to under-perform the Snowline Gold. But the stock apears to be less risky and, when comparing its historical volatility, Caledonia Mining is 1.15 times less risky than Snowline Gold. The stock trades about 0.0 of its potential returns per unit of risk. The Snowline Gold Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 234.00 in Snowline Gold Corp on August 31, 2024 and sell it today you would earn a total of 156.00 from holding Snowline Gold Corp or generate 66.67% 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. Snowline Gold Corp
Performance |
| Timeline |
| Caledonia Mining |
| Snowline Gold Corp |
Caledonia Mining and Snowline Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Snowline Gold
The main advantage of trading using opposite Caledonia Mining and Snowline Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining position performs unexpectedly, Snowline 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 Snowline Gold will offset losses from the drop in Snowline 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 |
| Snowline Gold vs. Heliostar Metals | Snowline Gold vs. Independence Gold Corp | Snowline Gold vs. Westward Gold | Snowline Gold vs. Cabral 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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