Correlation Between Golden Metal and SM Energy
Can any of the company-specific risk be diversified away by investing in both Golden Metal and SM Energy 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 Golden Metal and SM Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Metal Resources and SM Energy Co, you can compare the effects of market volatilities on Golden Metal and SM Energy 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 Golden Metal with a short position of SM Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Metal and SM Energy.
Diversification Opportunities for Golden Metal and SM Energy
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Golden and 0KZA is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and SM Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Energy and Golden Metal 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 Golden Metal Resources are associated (or correlated) with SM Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Energy has no effect on the direction of Golden Metal i.e., Golden Metal and SM Energy go up and down completely randomly.
Pair Corralation between Golden Metal and SM Energy
Assuming the 90 days trading horizon Golden Metal Resources is expected to generate 18.51 times more return on investment than SM Energy. However, Golden Metal is 18.51 times more volatile than SM Energy Co. It trades about 0.06 of its potential returns per unit of risk. SM Energy Co is currently generating about 0.03 per unit of risk. If you would invest 9.00 in Golden Metal Resources on October 11, 2024 and sell it today you would earn a total of 3,141 from holding Golden Metal Resources or generate 34900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Golden Metal Resources vs. SM Energy Co
Performance |
| Timeline |
| Golden Metal Resources |
| SM Energy |
Golden Metal and SM Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Metal and SM Energy
The main advantage of trading using opposite Golden Metal and SM Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Metal position performs unexpectedly, SM Energy 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 SM Energy will offset losses from the drop in SM Energy's long position.| Golden Metal vs. Automatic Data Processing | Golden Metal vs. Alliance Data Systems | Golden Metal vs. Aeorema Communications Plc | Golden Metal vs. Spirent Communications plc |
| SM Energy vs. Edinburgh Investment Trust | SM Energy vs. Empire Metals Limited | SM Energy vs. FC Investment Trust | SM Energy vs. Golden Metal 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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