Correlation Between GoGold Resources and Black Iron
Can any of the company-specific risk be diversified away by investing in both GoGold Resources and Black Iron 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 GoGold Resources and Black Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoGold Resources and Black Iron, you can compare the effects of market volatilities on GoGold Resources and Black Iron 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 GoGold Resources with a short position of Black Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoGold Resources and Black Iron.
Diversification Opportunities for GoGold Resources and Black Iron
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between GoGold and Black is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding GoGold Resources and Black Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Iron and GoGold 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 GoGold Resources are associated (or correlated) with Black Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Iron has no effect on the direction of GoGold Resources i.e., GoGold Resources and Black Iron go up and down completely randomly.
Pair Corralation between GoGold Resources and Black Iron
Assuming the 90 days trading horizon GoGold Resources is expected to generate 6.27 times less return on investment than Black Iron. But when comparing it to its historical volatility, GoGold Resources is 2.89 times less risky than Black Iron. It trades about 0.02 of its potential returns per unit of risk. Black Iron is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7.00 in Black Iron on August 29, 2024 and sell it today you would earn a total of 1.00 from holding Black Iron or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GoGold Resources vs. Black Iron
Performance |
| Timeline |
| GoGold Resources |
| Black Iron |
GoGold Resources and Black Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoGold Resources and Black Iron
The main advantage of trading using opposite GoGold Resources and Black Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoGold Resources position performs unexpectedly, Black Iron 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 Black Iron will offset losses from the drop in Black Iron's long position.| GoGold Resources vs. Defiance Silver Corp | GoGold Resources vs. Liberty Gold Corp | GoGold Resources vs. Dolly Varden Silver | GoGold Resources vs. Minaurum Gold |
| Black Iron vs. Northcliff Resources | Black Iron vs. St Augustine Gold | Black Iron vs. Mammoth Resources Corp | Black Iron vs. Black Widow Resources |
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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