Correlation Between Gold Resource and Constellium
Can any of the company-specific risk be diversified away by investing in both Gold Resource and Constellium 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 Gold Resource and Constellium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Resource and Constellium Nv, you can compare the effects of market volatilities on Gold Resource and Constellium 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 Gold Resource with a short position of Constellium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Resource and Constellium.
Diversification Opportunities for Gold Resource and Constellium
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gold and Constellium is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Gold Resource and Constellium Nv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellium Nv and Gold Resource 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 Gold Resource are associated (or correlated) with Constellium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellium Nv has no effect on the direction of Gold Resource i.e., Gold Resource and Constellium go up and down completely randomly.
Pair Corralation between Gold Resource and Constellium
Given the investment horizon of 90 days Gold Resource is expected to generate 3.83 times more return on investment than Constellium. However, Gold Resource is 3.83 times more volatile than Constellium Nv. It trades about 0.12 of its potential returns per unit of risk. Constellium Nv is currently generating about -0.01 per unit of risk. If you would invest 15.00 in Gold Resource on September 13, 2024 and sell it today you would earn a total of 2.00 from holding Gold Resource or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Resource vs. Constellium Nv
Performance |
| Timeline |
| Gold Resource |
| Constellium Nv |
Gold Resource and Constellium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Resource and Constellium
The main advantage of trading using opposite Gold Resource and Constellium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Resource position performs unexpectedly, Constellium 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 Constellium will offset losses from the drop in Constellium's long position.| Gold Resource vs. IAMGold | Gold Resource vs. Eldorado Gold Corp | Gold Resource vs. Coeur Mining | Gold Resource vs. Alamos Gold |
| Constellium vs. Century Aluminum | Constellium vs. Alcoa Corp | Constellium vs. China Hongqiao Group | Constellium vs. Norsk Hydro ASA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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