Correlation Between GoldMining and Vista Gold

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Can any of the company-specific risk be diversified away by investing in both GoldMining and Vista Gold 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 Vista Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Vista Gold, you can compare the effects of market volatilities on GoldMining and Vista Gold 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 Vista Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Vista Gold.

Diversification Opportunities for GoldMining and Vista Gold

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between GoldMining and Vista is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Vista Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Gold 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 Vista Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Gold has no effect on the direction of GoldMining i.e., GoldMining and Vista Gold go up and down completely randomly.

Pair Corralation between GoldMining and Vista Gold

Given the investment horizon of 90 days GoldMining is expected to generate 0.74 times more return on investment than Vista Gold. However, GoldMining is 1.34 times less risky than Vista Gold. It trades about -0.12 of its potential returns per unit of risk. Vista Gold is currently generating about -0.1 per unit of risk. If you would invest  93.00  in GoldMining on August 28, 2024 and sell it today you would lose (7.00) from holding GoldMining or give up 7.53% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

GoldMining  vs.  Vista Gold

 Performance 
       Timeline  
GoldMining 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in GoldMining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, GoldMining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Vista Gold 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Vista Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Vista Gold is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

GoldMining and Vista Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GoldMining and Vista Gold

The main advantage of trading using opposite GoldMining and Vista Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Vista Gold 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 Vista Gold will offset losses from the drop in Vista Gold's long position.
The idea behind GoldMining and Vista Gold pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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