Correlation Between Golden Metal and Aberdeen Diversified
Can any of the company-specific risk be diversified away by investing in both Golden Metal and Aberdeen Diversified 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 Aberdeen Diversified 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 Aberdeen Diversified Income, you can compare the effects of market volatilities on Golden Metal and Aberdeen Diversified 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 Aberdeen Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Metal and Aberdeen Diversified.
Diversification Opportunities for Golden Metal and Aberdeen Diversified
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Golden and Aberdeen is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and Aberdeen Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Diversified 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 Aberdeen Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Diversified has no effect on the direction of Golden Metal i.e., Golden Metal and Aberdeen Diversified go up and down completely randomly.
Pair Corralation between Golden Metal and Aberdeen Diversified
Assuming the 90 days trading horizon Golden Metal Resources is expected to generate 3.02 times more return on investment than Aberdeen Diversified. However, Golden Metal is 3.02 times more volatile than Aberdeen Diversified Income. It trades about 0.12 of its potential returns per unit of risk. Aberdeen Diversified Income is currently generating about 0.25 per unit of risk. If you would invest 3,000 in Golden Metal Resources on October 11, 2024 and sell it today you would earn a total of 150.00 from holding Golden Metal Resources or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Metal Resources vs. Aberdeen Diversified Income
Performance |
| Timeline |
| Golden Metal Resources |
| Aberdeen Diversified |
Golden Metal and Aberdeen Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Metal and Aberdeen Diversified
The main advantage of trading using opposite Golden Metal and Aberdeen Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Metal position performs unexpectedly, Aberdeen Diversified 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 Aberdeen Diversified will offset losses from the drop in Aberdeen Diversified's long position.| Golden Metal vs. European Metals Holdings | Golden Metal vs. CNH Industrial NV | Golden Metal vs. Empire Metals Limited | Golden Metal vs. Hochschild Mining plc |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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