Correlation Between Alphabet and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Alphabet and Caledonia Mining 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 Alphabet and Caledonia Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and Caledonia Mining, you can compare the effects of market volatilities on Alphabet and Caledonia Mining 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 Alphabet with a short position of Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Caledonia Mining.
Diversification Opportunities for Alphabet and Caledonia Mining
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alphabet and Caledonia is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Alphabet i.e., Alphabet and Caledonia Mining go up and down completely randomly.
Pair Corralation between Alphabet and Caledonia Mining
Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 0.61 times more return on investment than Caledonia Mining. However, Alphabet Inc Class C is 1.64 times less risky than Caledonia Mining. It trades about 0.07 of its potential returns per unit of risk. Caledonia Mining is currently generating about 0.0 per unit of risk. If you would invest 12,461 in Alphabet Inc Class C on November 8, 2024 and sell it today you would earn a total of 6,870 from holding Alphabet Inc Class C or generate 55.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Caledonia Mining
Performance |
| Timeline |
| Alphabet Class C |
| Caledonia Mining |
Alphabet and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Caledonia Mining
The main advantage of trading using opposite Alphabet and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.The idea behind Alphabet Inc Class C and Caledonia Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Caledonia Mining vs. DRDGOLD Limited ADR | Caledonia Mining vs. Galiano Gold | Caledonia Mining vs. Mastech Holdings | Caledonia Mining vs. EMX Royalty 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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