Correlation Between Cerrado Gold and Evolution Mining
Can any of the company-specific risk be diversified away by investing in both Cerrado Gold and Evolution Mining 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 Cerrado Gold and Evolution Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cerrado Gold and Evolution Mining, you can compare the effects of market volatilities on Cerrado Gold and Evolution Mining 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 Cerrado Gold with a short position of Evolution Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cerrado Gold and Evolution Mining.
Diversification Opportunities for Cerrado Gold and Evolution Mining
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cerrado and Evolution is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cerrado Gold and Evolution Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining and Cerrado Gold 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 Cerrado Gold are associated (or correlated) with Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of Cerrado Gold i.e., Cerrado Gold and Evolution Mining go up and down completely randomly.
Pair Corralation between Cerrado Gold and Evolution Mining
Assuming the 90 days horizon Cerrado Gold is expected to generate 2.6 times more return on investment than Evolution Mining. However, Cerrado Gold is 2.6 times more volatile than Evolution Mining. It trades about 0.03 of its potential returns per unit of risk. Evolution Mining is currently generating about 0.05 per unit of risk. If you would invest 44.00 in Cerrado Gold on September 3, 2024 and sell it today you would lose (20.00) from holding Cerrado Gold or give up 45.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.14% |
| Values | Daily Returns |
Cerrado Gold vs. Evolution Mining
Performance |
| Timeline |
| Cerrado Gold |
| Evolution Mining |
Cerrado Gold and Evolution Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cerrado Gold and Evolution Mining
The main advantage of trading using opposite Cerrado Gold and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cerrado Gold position performs unexpectedly, Evolution Mining 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 Evolution Mining will offset losses from the drop in Evolution Mining's long position.| Cerrado Gold vs. Antioquia Gold | Cerrado Gold vs. Red Pine Exploration | Cerrado Gold vs. Bellevue Gold Limited | Cerrado Gold vs. Asante Gold |
| Evolution Mining vs. Harmony Gold Mining | Evolution Mining vs. SPACE | Evolution Mining vs. T Rowe Price | Evolution Mining vs. Ampleforth |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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