Correlation Between Fresnillo PLC and Sonoro Gold
Can any of the company-specific risk be diversified away by investing in both Fresnillo PLC and Sonoro 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 Fresnillo PLC and Sonoro Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fresnillo PLC and Sonoro Gold Corp, you can compare the effects of market volatilities on Fresnillo PLC and Sonoro 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 Fresnillo PLC with a short position of Sonoro Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresnillo PLC and Sonoro Gold.
Diversification Opportunities for Fresnillo PLC and Sonoro Gold
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fresnillo and Sonoro is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fresnillo PLC and Sonoro Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonoro Gold Corp and Fresnillo PLC 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 Fresnillo PLC are associated (or correlated) with Sonoro Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonoro Gold Corp has no effect on the direction of Fresnillo PLC i.e., Fresnillo PLC and Sonoro Gold go up and down completely randomly.
Pair Corralation between Fresnillo PLC and Sonoro Gold
Assuming the 90 days horizon Fresnillo PLC is expected to under-perform the Sonoro Gold. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fresnillo PLC is 3.03 times less risky than Sonoro Gold. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Sonoro Gold Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 6.27 in Sonoro Gold Corp on September 1, 2024 and sell it today you would lose (0.22) from holding Sonoro Gold Corp or give up 3.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fresnillo PLC vs. Sonoro Gold Corp
Performance |
| Timeline |
| Fresnillo PLC |
| Sonoro Gold Corp |
Fresnillo PLC and Sonoro Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresnillo PLC and Sonoro Gold
The main advantage of trading using opposite Fresnillo PLC and Sonoro Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresnillo PLC position performs unexpectedly, Sonoro 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 Sonoro Gold will offset losses from the drop in Sonoro Gold's long position.| Fresnillo PLC vs. Defiance Silver Corp | Fresnillo PLC vs. HUMANA INC | Fresnillo PLC vs. SCOR PK | Fresnillo PLC vs. Aquagold International |
| Sonoro Gold vs. Endeavour Silver Corp | Sonoro Gold vs. Metalla Royalty Streaming | Sonoro Gold vs. New Pacific Metals | Sonoro Gold vs. Hecla Mining |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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