Correlation Between Cerrado Gold and Endurance Gold
Can any of the company-specific risk be diversified away by investing in both Cerrado Gold and Endurance 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 Cerrado Gold and Endurance Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cerrado Gold and Endurance Gold, you can compare the effects of market volatilities on Cerrado Gold and Endurance 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 Cerrado Gold with a short position of Endurance Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cerrado Gold and Endurance Gold.
Diversification Opportunities for Cerrado Gold and Endurance Gold
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cerrado and Endurance is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Cerrado Gold and Endurance Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endurance Gold 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 Endurance Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endurance Gold has no effect on the direction of Cerrado Gold i.e., Cerrado Gold and Endurance Gold go up and down completely randomly.
Pair Corralation between Cerrado Gold and Endurance Gold
Assuming the 90 days horizon Cerrado Gold is expected to generate 1.6 times more return on investment than Endurance Gold. However, Cerrado Gold is 1.6 times more volatile than Endurance Gold. It trades about 0.03 of its potential returns per unit of risk. Endurance Gold is currently generating about -0.11 per unit of risk. If you would invest 30.00 in Cerrado Gold on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Cerrado Gold or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cerrado Gold vs. Endurance Gold
Performance |
| Timeline |
| Cerrado Gold |
| Endurance Gold |
Cerrado Gold and Endurance Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cerrado Gold and Endurance Gold
The main advantage of trading using opposite Cerrado Gold and Endurance Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cerrado Gold position performs unexpectedly, Endurance 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 Endurance Gold will offset losses from the drop in Endurance Gold's long position.| Cerrado Gold vs. Aurion Resources | Cerrado Gold vs. Rio2 Limited | Cerrado Gold vs. Palamina Corp | Cerrado Gold vs. BTU Metals Corp |
| Endurance Gold vs. Aurion Resources | Endurance Gold vs. Rio2 Limited | Endurance Gold vs. Palamina Corp | Endurance Gold vs. BTU Metals Corp |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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