Correlation Between DG Innovate and GoldMining
Can any of the company-specific risk be diversified away by investing in both DG Innovate and GoldMining 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 DG Innovate and GoldMining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DG Innovate PLC and GoldMining, you can compare the effects of market volatilities on DG Innovate and GoldMining 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 DG Innovate with a short position of GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of DG Innovate and GoldMining.
Diversification Opportunities for DG Innovate and GoldMining
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DGI and GoldMining is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding DG Innovate PLC and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and DG Innovate 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 DG Innovate PLC are associated (or correlated) with GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of DG Innovate i.e., DG Innovate and GoldMining go up and down completely randomly.
Pair Corralation between DG Innovate and GoldMining
Assuming the 90 days trading horizon DG Innovate PLC is expected to generate 2.14 times more return on investment than GoldMining. However, DG Innovate is 2.14 times more volatile than GoldMining. It trades about 0.3 of its potential returns per unit of risk. GoldMining is currently generating about -0.2 per unit of risk. If you would invest 6.30 in DG Innovate PLC on August 29, 2024 and sell it today you would earn a total of 3.20 from holding DG Innovate PLC or generate 50.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 60.87% |
| Values | Daily Returns |
DG Innovate PLC vs. GoldMining
Performance |
| Timeline |
| DG Innovate PLC |
| GoldMining |
DG Innovate and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DG Innovate and GoldMining
The main advantage of trading using opposite DG Innovate and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DG Innovate position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| DG Innovate vs. Foresight Environmental Infrastructure | DG Innovate vs. Iron Mountain | DG Innovate vs. Seche Environnement SA | DG Innovate vs. Spirent Communications plc |
| GoldMining vs. Lendinvest PLC | GoldMining vs. Neometals | GoldMining vs. Coor Service Management | GoldMining vs. Albion Technology General |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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