Correlation Between Caledonia Mining and Steppe Gold
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining and Steppe 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 Steppe 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 Steppe Gold, you can compare the effects of market volatilities on Caledonia Mining and Steppe 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 Steppe Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Steppe Gold.
Diversification Opportunities for Caledonia Mining and Steppe Gold
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Caledonia and Steppe is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Steppe Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steppe 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 Steppe Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steppe Gold has no effect on the direction of Caledonia Mining i.e., Caledonia Mining and Steppe Gold go up and down completely randomly.
Pair Corralation between Caledonia Mining and Steppe Gold
Given the investment horizon of 90 days Caledonia Mining is expected to generate 1.04 times less return on investment than Steppe Gold. But when comparing it to its historical volatility, Caledonia Mining is 1.34 times less risky than Steppe Gold. It trades about 0.03 of its potential returns per unit of risk. Steppe Gold is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 45.00 in Steppe Gold on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Steppe Gold or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caledonia Mining vs. Steppe Gold
Performance |
| Timeline |
| Caledonia Mining |
| Steppe Gold |
Caledonia Mining and Steppe Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Steppe Gold
The main advantage of trading using opposite Caledonia Mining and Steppe Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining position performs unexpectedly, Steppe 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 Steppe Gold will offset losses from the drop in Steppe 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 |
| Steppe Gold vs. Maple Gold Mines | Steppe Gold vs. Caledonia Mining | Steppe Gold vs. Fortuna Silver Mines | Steppe Gold vs. Sandstorm Gold Ltd |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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