Correlation Between VanEck Gold and Pan American
Can any of the company-specific risk be diversified away by investing in both VanEck Gold and Pan American 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 VanEck Gold and Pan American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Gold Miners and Pan American Silver, you can compare the effects of market volatilities on VanEck Gold and Pan American 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 VanEck Gold with a short position of Pan American. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Gold and Pan American.
Diversification Opportunities for VanEck Gold and Pan American
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VanEck and Pan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Gold Miners and Pan American Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan American Silver and VanEck 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 VanEck Gold Miners are associated (or correlated) with Pan American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan American Silver has no effect on the direction of VanEck Gold i.e., VanEck Gold and Pan American go up and down completely randomly.
Pair Corralation between VanEck Gold and Pan American
Considering the 90-day investment horizon VanEck Gold Miners is expected to generate 0.83 times more return on investment than Pan American. However, VanEck Gold Miners is 1.21 times less risky than Pan American. It trades about -0.21 of its potential returns per unit of risk. Pan American Silver is currently generating about -0.19 per unit of risk. If you would invest 4,136 in VanEck Gold Miners on August 28, 2024 and sell it today you would lose (422.00) from holding VanEck Gold Miners or give up 10.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Gold Miners vs. Pan American Silver
Performance |
| Timeline |
| VanEck Gold Miners |
| Pan American Silver |
VanEck Gold and Pan American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Gold and Pan American
The main advantage of trading using opposite VanEck Gold and Pan American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Gold position performs unexpectedly, Pan American 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 Pan American will offset losses from the drop in Pan American's long position.| VanEck Gold vs. VanEck Junior Gold | VanEck Gold vs. iShares Silver Trust | VanEck Gold vs. SPDR Gold Shares | VanEck Gold vs. Newmont Goldcorp Corp |
| Pan American vs. Newmont Goldcorp Corp | Pan American vs. Wheaton Precious Metals | Pan American vs. Franco Nevada | Pan American vs. Kinross 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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