Correlation Between GFG Resources and Dundee Precious
Can any of the company-specific risk be diversified away by investing in both GFG Resources and Dundee Precious 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 GFG Resources and Dundee Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFG Resources and Dundee Precious Metals, you can compare the effects of market volatilities on GFG Resources and Dundee Precious 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 GFG Resources with a short position of Dundee Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFG Resources and Dundee Precious.
Diversification Opportunities for GFG Resources and Dundee Precious
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GFG and Dundee is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding GFG Resources and Dundee Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dundee Precious Metals and GFG Resources 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 GFG Resources are associated (or correlated) with Dundee Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dundee Precious Metals has no effect on the direction of GFG Resources i.e., GFG Resources and Dundee Precious go up and down completely randomly.
Pair Corralation between GFG Resources and Dundee Precious
Assuming the 90 days horizon GFG Resources is expected to generate 2.4 times more return on investment than Dundee Precious. However, GFG Resources is 2.4 times more volatile than Dundee Precious Metals. It trades about 0.08 of its potential returns per unit of risk. Dundee Precious Metals is currently generating about 0.07 per unit of risk. If you would invest 6.35 in GFG Resources on September 1, 2024 and sell it today you would earn a total of 4.65 from holding GFG Resources or generate 73.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
GFG Resources vs. Dundee Precious Metals
Performance |
| Timeline |
| GFG Resources |
| Dundee Precious Metals |
GFG Resources and Dundee Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFG Resources and Dundee Precious
The main advantage of trading using opposite GFG Resources and Dundee Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFG Resources position performs unexpectedly, Dundee Precious 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 Dundee Precious will offset losses from the drop in Dundee Precious' long position.| GFG Resources vs. Aurion Resources | GFG Resources vs. Rio2 Limited | GFG Resources vs. Palamina Corp | GFG Resources vs. BTU Metals Corp |
| Dundee Precious vs. South32 Limited | Dundee Precious vs. NioCorp Developments Ltd | Dundee Precious vs. HUMANA INC | Dundee Precious vs. SCOR PK |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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