Correlation Between GoldMining and Worthington Steel
Can any of the company-specific risk be diversified away by investing in both GoldMining and Worthington Steel 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 Worthington Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Worthington Steel, you can compare the effects of market volatilities on GoldMining and Worthington Steel 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 Worthington Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Worthington Steel.
Diversification Opportunities for GoldMining and Worthington Steel
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GoldMining and Worthington is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Worthington Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Steel 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 Worthington Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Steel has no effect on the direction of GoldMining i.e., GoldMining and Worthington Steel go up and down completely randomly.
Pair Corralation between GoldMining and Worthington Steel
Given the investment horizon of 90 days GoldMining is expected to generate 3.92 times less return on investment than Worthington Steel. But when comparing it to its historical volatility, GoldMining is 1.19 times less risky than Worthington Steel. It trades about 0.02 of its potential returns per unit of risk. Worthington Steel is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,946 in Worthington Steel on September 1, 2024 and sell it today you would earn a total of 1,538 from holding Worthington Steel or generate 52.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GoldMining vs. Worthington Steel
Performance |
| Timeline |
| GoldMining |
| Worthington Steel |
GoldMining and Worthington Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Worthington Steel
The main advantage of trading using opposite GoldMining and Worthington Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Worthington Steel 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 Worthington Steel will offset losses from the drop in Worthington Steel's long position.| GoldMining vs. Gold Royalty Corp | GoldMining vs. Uranium Royalty Corp | GoldMining vs. Metalla Royalty Streaming | GoldMining vs. Equinox Gold Corp |
| Worthington Steel vs. Fortitude Gold Corp | Worthington Steel vs. New Gold | Worthington Steel vs. Galiano Gold | Worthington Steel vs. GoldMining |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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