Correlation Between Harmony Gold and PacifiCorp
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and PacifiCorp 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 Harmony Gold and PacifiCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harmony Gold Mining and PacifiCorp, you can compare the effects of market volatilities on Harmony Gold and PacifiCorp 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 Harmony Gold with a short position of PacifiCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and PacifiCorp.
Diversification Opportunities for Harmony Gold and PacifiCorp
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Harmony and PacifiCorp is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and PacifiCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacifiCorp and Harmony Gold 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 Harmony Gold Mining are associated (or correlated) with PacifiCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PacifiCorp has no effect on the direction of Harmony Gold i.e., Harmony Gold and PacifiCorp go up and down completely randomly.
Pair Corralation between Harmony Gold and PacifiCorp
Assuming the 90 days horizon Harmony Gold is expected to generate 2.56 times less return on investment than PacifiCorp. But when comparing it to its historical volatility, Harmony Gold Mining is 3.93 times less risky than PacifiCorp. It trades about 0.08 of its potential returns per unit of risk. PacifiCorp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 16,567 in PacifiCorp on September 15, 2024 and sell it today you would lose (3,072) from holding PacifiCorp or give up 18.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.72% |
| Values | Daily Returns |
Harmony Gold Mining vs. PacifiCorp
Performance |
| Timeline |
| Harmony Gold Mining |
| PacifiCorp |
Harmony Gold and PacifiCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and PacifiCorp
The main advantage of trading using opposite Harmony Gold and PacifiCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, PacifiCorp 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 PacifiCorp will offset losses from the drop in PacifiCorp's long position.| Harmony Gold vs. Revival Gold | Harmony Gold vs. Galiano Gold | Harmony Gold vs. US Gold Corp | Harmony Gold vs. HUMANA INC |
| PacifiCorp vs. Harmony Gold Mining | PacifiCorp vs. Contagious Gaming | PacifiCorp vs. Boyd Gaming | PacifiCorp vs. Coty Inc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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