Correlation Between Golden Metal and First
Can any of the company-specific risk be diversified away by investing in both Golden Metal and First 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 First 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 First Class Metals, you can compare the effects of market volatilities on Golden Metal and First 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 First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Metal and First.
Diversification Opportunities for Golden Metal and First
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Golden and First is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and First Class Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Class Metals 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 First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Class Metals has no effect on the direction of Golden Metal i.e., Golden Metal and First go up and down completely randomly.
Pair Corralation between Golden Metal and First
Assuming the 90 days trading horizon Golden Metal Resources is expected to generate 0.62 times more return on investment than First. However, Golden Metal Resources is 1.6 times less risky than First. It trades about 0.16 of its potential returns per unit of risk. First Class Metals is currently generating about -0.29 per unit of risk. If you would invest 2,950 in Golden Metal Resources on October 12, 2024 and sell it today you would earn a total of 200.00 from holding Golden Metal Resources or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Golden Metal Resources vs. First Class Metals
Performance |
| Timeline |
| Golden Metal Resources |
| First Class Metals |
Golden Metal and First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Metal and First
The main advantage of trading using opposite Golden Metal and First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Metal position performs unexpectedly, First 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 First will offset losses from the drop in First's long position.| Golden Metal vs. Givaudan SA | Golden Metal vs. Antofagasta PLC | Golden Metal vs. Ferrexpo PLC | Golden Metal vs. Atalaya Mining |
| First vs. Broadcom | First vs. Golden Metal Resources | First vs. Bloomsbury Publishing Plc | First vs. Kaufman Et Broad |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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