Correlation Between Gap, and US GoldMining
Can any of the company-specific risk be diversified away by investing in both Gap, and US 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 Gap, and US GoldMining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gap, and US GoldMining Warrant, you can compare the effects of market volatilities on Gap, and US 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 Gap, with a short position of US GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap, and US GoldMining.
Diversification Opportunities for Gap, and US GoldMining
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gap, and USGOW is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and US GoldMining Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US GoldMining Warrant and Gap, 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 The Gap, are associated (or correlated) with US GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US GoldMining Warrant has no effect on the direction of Gap, i.e., Gap, and US GoldMining go up and down completely randomly.
Pair Corralation between Gap, and US GoldMining
Considering the 90-day investment horizon Gap, is expected to generate 7.17 times less return on investment than US GoldMining. But when comparing it to its historical volatility, The Gap, is 5.02 times less risky than US GoldMining. It trades about 0.22 of its potential returns per unit of risk. US GoldMining Warrant is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 97.00 in US GoldMining Warrant on September 1, 2024 and sell it today you would earn a total of 142.00 from holding US GoldMining Warrant or generate 146.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gap, vs. US GoldMining Warrant
Performance |
| Timeline |
| Gap, |
| US GoldMining Warrant |
Gap, and US GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gap, and US GoldMining
The main advantage of trading using opposite Gap, and US GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap, position performs unexpectedly, US 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 US GoldMining will offset losses from the drop in US GoldMining's long position.The idea behind The Gap, and US GoldMining Warrant pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| US GoldMining vs. NioCorp Developments Ltd | US GoldMining vs. Teck Resources Ltd | US GoldMining vs. Sigma Lithium Resources | US GoldMining vs. MP Materials 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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