Correlation Between Golden Metal and Mineral Financial
Can any of the company-specific risk be diversified away by investing in both Golden Metal and Mineral Financial 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 Mineral Financial 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 Mineral Financial Investments, you can compare the effects of market volatilities on Golden Metal and Mineral Financial 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 Mineral Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Metal and Mineral Financial.
Diversification Opportunities for Golden Metal and Mineral Financial
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Golden and Mineral is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and Mineral Financial Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Financial 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 Mineral Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Financial has no effect on the direction of Golden Metal i.e., Golden Metal and Mineral Financial go up and down completely randomly.
Pair Corralation between Golden Metal and Mineral Financial
Assuming the 90 days trading horizon Golden Metal is expected to generate 1.14 times less return on investment than Mineral Financial. In addition to that, Golden Metal is 1.5 times more volatile than Mineral Financial Investments. It trades about 0.16 of its total potential returns per unit of risk. Mineral Financial Investments is currently generating about 0.28 per unit of volatility. If you would invest 1,025 in Mineral Financial Investments on September 13, 2024 and sell it today you would earn a total of 250.00 from holding Mineral Financial Investments or generate 24.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Golden Metal Resources vs. Mineral Financial Investments
Performance |
| Timeline |
| Golden Metal Resources |
| Mineral Financial |
Golden Metal and Mineral Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Metal and Mineral Financial
The main advantage of trading using opposite Golden Metal and Mineral Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Metal position performs unexpectedly, Mineral Financial 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 Mineral Financial will offset losses from the drop in Mineral Financial's long position.| Golden Metal vs. Spotify Technology SA | Golden Metal vs. Darden Restaurants | Golden Metal vs. GoldMining | Golden Metal vs. Vitec Software Group |
| Mineral Financial vs. Schroders Investment Trusts | Mineral Financial vs. Central Asia Metals | Mineral Financial vs. Golden Metal Resources | Mineral Financial vs. The Mercantile Investment |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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