Correlation Between GoldMining and Universal Stainless
Can any of the company-specific risk be diversified away by investing in both GoldMining and Universal Stainless 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 GoldMining and Universal Stainless into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Universal Stainless Alloy, you can compare the effects of market volatilities on GoldMining and Universal Stainless 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 GoldMining with a short position of Universal Stainless. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Universal Stainless.
Diversification Opportunities for GoldMining and Universal Stainless
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GoldMining and Universal is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Universal Stainless Alloy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Stainless Alloy and GoldMining 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 GoldMining are associated (or correlated) with Universal Stainless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Stainless Alloy has no effect on the direction of GoldMining i.e., GoldMining and Universal Stainless go up and down completely randomly.
Pair Corralation between GoldMining and Universal Stainless
Given the investment horizon of 90 days GoldMining is expected to under-perform the Universal Stainless. But the stock apears to be less risky and, when comparing its historical volatility, GoldMining is 1.15 times less risky than Universal Stainless. The stock trades about -0.01 of its potential returns per unit of risk. The Universal Stainless Alloy is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 711.00 in Universal Stainless Alloy on August 27, 2024 and sell it today you would earn a total of 3,716 from holding Universal Stainless Alloy or generate 522.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GoldMining vs. Universal Stainless Alloy
Performance |
| Timeline |
| GoldMining |
| Universal Stainless Alloy |
GoldMining and Universal Stainless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Universal Stainless
The main advantage of trading using opposite GoldMining and Universal Stainless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Universal Stainless 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 Universal Stainless will offset losses from the drop in Universal Stainless' long position.| GoldMining vs. Gold Royalty Corp | GoldMining vs. Uranium Royalty Corp | GoldMining vs. Metalla Royalty Streaming | GoldMining vs. Equinox Gold Corp |
| Universal Stainless vs. Olympic Steel | Universal Stainless vs. Outokumpu Oyj ADR | Universal Stainless vs. Usinas Siderurgicas de | Universal Stainless vs. POSCO Holdings |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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