Correlation Between Cerrado Gold and Sirios Resources
Can any of the company-specific risk be diversified away by investing in both Cerrado Gold and Sirios Resources 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 Sirios Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cerrado Gold and Sirios Resources, you can compare the effects of market volatilities on Cerrado Gold and Sirios Resources 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 Sirios Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cerrado Gold and Sirios Resources.
Diversification Opportunities for Cerrado Gold and Sirios Resources
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cerrado and Sirios is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Cerrado Gold and Sirios Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirios Resources 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 Sirios Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirios Resources has no effect on the direction of Cerrado Gold i.e., Cerrado Gold and Sirios Resources go up and down completely randomly.
Pair Corralation between Cerrado Gold and Sirios Resources
Assuming the 90 days horizon Cerrado Gold is expected to generate 1.8 times more return on investment than Sirios Resources. However, Cerrado Gold is 1.8 times more volatile than Sirios Resources. It trades about 0.03 of its potential returns per unit of risk. Sirios Resources 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 Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cerrado Gold vs. Sirios Resources
Performance |
| Timeline |
| Cerrado Gold |
| Sirios Resources |
Cerrado Gold and Sirios Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cerrado Gold and Sirios Resources
The main advantage of trading using opposite Cerrado Gold and Sirios Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cerrado Gold position performs unexpectedly, Sirios Resources 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 Sirios Resources will offset losses from the drop in Sirios Resources' long position.| Cerrado Gold vs. Aurion Resources | Cerrado Gold vs. Rio2 Limited | Cerrado Gold vs. Palamina Corp | Cerrado Gold vs. BTU Metals Corp |
| Sirios Resources vs. Red Pine Exploration | Sirios Resources vs. Precipitate Gold Corp | Sirios Resources vs. Spanish Mountain Gold | Sirios Resources vs. Bravada 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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