Correlation Between Golden Metal and Ithaca Energy
Can any of the company-specific risk be diversified away by investing in both Golden Metal and Ithaca 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 Ithaca 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 Ithaca Energy PLC, you can compare the effects of market volatilities on Golden Metal and Ithaca 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 Ithaca Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Metal and Ithaca Energy.
Diversification Opportunities for Golden Metal and Ithaca Energy
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Golden and Ithaca is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and Ithaca Energy PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ithaca Energy PLC 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 Ithaca Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ithaca Energy PLC has no effect on the direction of Golden Metal i.e., Golden Metal and Ithaca Energy go up and down completely randomly.
Pair Corralation between Golden Metal and Ithaca Energy
Assuming the 90 days trading horizon Golden Metal Resources is expected to generate 1.25 times more return on investment than Ithaca Energy. However, Golden Metal is 1.25 times more volatile than Ithaca Energy PLC. It trades about 0.06 of its potential returns per unit of risk. Ithaca Energy PLC is currently generating about 0.03 per unit of risk. If you would invest 3,200 in Golden Metal Resources on November 6, 2024 and sell it today you would earn a total of 100.00 from holding Golden Metal Resources or generate 3.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Metal Resources vs. Ithaca Energy PLC
Performance |
| Timeline |
| Golden Metal Resources |
| Ithaca Energy PLC |
Golden Metal and Ithaca Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Metal and Ithaca Energy
The main advantage of trading using opposite Golden Metal and Ithaca Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Metal position performs unexpectedly, Ithaca 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 Ithaca Energy will offset losses from the drop in Ithaca Energy's long position.| Golden Metal vs. Auto Trader Group | Golden Metal vs. Qurate Retail Series | Golden Metal vs. Eastman Chemical Co | Golden Metal vs. Air Products Chemicals |
| Ithaca Energy vs. Atalaya Mining | Ithaca Energy vs. McEwen Mining | Ithaca Energy vs. AfriTin Mining | Ithaca Energy vs. Heavitree Brewery |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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