Correlation Between Dundee Precious and Wesdome Gold
Can any of the company-specific risk be diversified away by investing in both Dundee Precious and Wesdome 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 Dundee Precious and Wesdome Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dundee Precious Metals and Wesdome Gold Mines, you can compare the effects of market volatilities on Dundee Precious and Wesdome 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 Dundee Precious with a short position of Wesdome Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dundee Precious and Wesdome Gold.
Diversification Opportunities for Dundee Precious and Wesdome Gold
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dundee and Wesdome is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dundee Precious Metals and Wesdome Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesdome Gold Mines and Dundee Precious 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 Dundee Precious Metals are associated (or correlated) with Wesdome Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesdome Gold Mines has no effect on the direction of Dundee Precious i.e., Dundee Precious and Wesdome Gold go up and down completely randomly.
Pair Corralation between Dundee Precious and Wesdome Gold
Assuming the 90 days trading horizon Dundee Precious is expected to generate 1.31 times less return on investment than Wesdome Gold. But when comparing it to its historical volatility, Dundee Precious Metals is 1.38 times less risky than Wesdome Gold. It trades about 0.08 of its potential returns per unit of risk. Wesdome Gold Mines is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 651.00 in Wesdome Gold Mines on November 19, 2024 and sell it today you would earn a total of 776.00 from holding Wesdome Gold Mines or generate 119.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dundee Precious Metals vs. Wesdome Gold Mines
Performance |
| Timeline |
| Dundee Precious Metals |
| Wesdome Gold Mines |
Dundee Precious and Wesdome Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dundee Precious and Wesdome Gold
The main advantage of trading using opposite Dundee Precious and Wesdome Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dundee Precious position performs unexpectedly, Wesdome 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 Wesdome Gold will offset losses from the drop in Wesdome Gold's long position.| Dundee Precious vs. Centerra Gold | Dundee Precious vs. SSR Mining | Dundee Precious vs. Alamos Gold | Dundee Precious vs. Endeavour Mining Corp |
| Wesdome Gold vs. OceanaGold | Wesdome Gold vs. Torex Gold Resources | Wesdome Gold vs. Alamos Gold | Wesdome Gold vs. Dundee Precious Metals |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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