Correlation Between Golden Lake and Nevada King
Can any of the company-specific risk be diversified away by investing in both Golden Lake and Nevada King 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 Lake and Nevada King into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Lake Exploration and Nevada King Gold, you can compare the effects of market volatilities on Golden Lake and Nevada King 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 Lake with a short position of Nevada King. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Lake and Nevada King.
Diversification Opportunities for Golden Lake and Nevada King
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Golden and Nevada is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Golden Lake Exploration and Nevada King Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nevada King Gold and Golden Lake 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 Lake Exploration are associated (or correlated) with Nevada King. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nevada King Gold has no effect on the direction of Golden Lake i.e., Golden Lake and Nevada King go up and down completely randomly.
Pair Corralation between Golden Lake and Nevada King
Assuming the 90 days horizon Golden Lake Exploration is expected to generate 1.57 times more return on investment than Nevada King. However, Golden Lake is 1.57 times more volatile than Nevada King Gold. It trades about 0.08 of its potential returns per unit of risk. Nevada King Gold is currently generating about 0.07 per unit of risk. If you would invest 2.90 in Golden Lake Exploration on October 26, 2024 and sell it today you would earn a total of 0.37 from holding Golden Lake Exploration or generate 12.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.5% |
| Values | Daily Returns |
Golden Lake Exploration vs. Nevada King Gold
Performance |
| Timeline |
| Golden Lake Exploration |
| Nevada King Gold |
Golden Lake and Nevada King Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Lake and Nevada King
The main advantage of trading using opposite Golden Lake and Nevada King positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Lake position performs unexpectedly, Nevada King 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 Nevada King will offset losses from the drop in Nevada King's long position.| Golden Lake vs. Prime Meridian Resources | Golden Lake vs. Macmahon Holdings Limited | Golden Lake vs. Rokmaster Resources Corp | Golden Lake vs. Hudson Resources |
| Nevada King vs. Group Ten Metals | Nevada King vs. Ascendant Resources | Nevada King vs. Atico Mining | Nevada King vs. Prime Mining Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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