Correlation Between GoGold Resources and Mountain Boy
Can any of the company-specific risk be diversified away by investing in both GoGold Resources and Mountain Boy 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 Mountain Boy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoGold Resources and Mountain Boy Minerals, you can compare the effects of market volatilities on GoGold Resources and Mountain Boy 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 Mountain Boy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoGold Resources and Mountain Boy.
Diversification Opportunities for GoGold Resources and Mountain Boy
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GoGold and Mountain is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding GoGold Resources and Mountain Boy Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mountain Boy Minerals 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 Mountain Boy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mountain Boy Minerals has no effect on the direction of GoGold Resources i.e., GoGold Resources and Mountain Boy go up and down completely randomly.
Pair Corralation between GoGold Resources and Mountain Boy
Assuming the 90 days trading horizon GoGold Resources is expected to under-perform the Mountain Boy. But the stock apears to be less risky and, when comparing its historical volatility, GoGold Resources is 3.88 times less risky than Mountain Boy. The stock trades about -0.03 of its potential returns per unit of risk. The Mountain Boy Minerals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Mountain Boy Minerals on September 3, 2024 and sell it today you would lose (2.50) from holding Mountain Boy Minerals or give up 62.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GoGold Resources vs. Mountain Boy Minerals
Performance |
| Timeline |
| GoGold Resources |
| Mountain Boy Minerals |
GoGold Resources and Mountain Boy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoGold Resources and Mountain Boy
The main advantage of trading using opposite GoGold Resources and Mountain Boy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoGold Resources position performs unexpectedly, Mountain Boy 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 Mountain Boy will offset losses from the drop in Mountain Boy's long position.| GoGold Resources vs. Algoma Steel Group | GoGold Resources vs. Champion Iron | GoGold Resources vs. International Zeolite Corp | GoGold Resources vs. European Residential Real |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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