Correlation Between Independence Gold and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Independence Gold 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 Independence Gold and Caledonia Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Independence Gold Corp and Caledonia Mining, you can compare the effects of market volatilities on Independence Gold 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 Independence Gold with a short position of Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Independence Gold and Caledonia Mining.
Diversification Opportunities for Independence Gold and Caledonia Mining
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Independence and Caledonia is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Independence Gold Corp and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining and Independence 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 Independence Gold Corp 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 Independence Gold i.e., Independence Gold and Caledonia Mining go up and down completely randomly.
Pair Corralation between Independence Gold and Caledonia Mining
Assuming the 90 days horizon Independence Gold Corp is expected to generate 2.15 times more return on investment than Caledonia Mining. However, Independence Gold is 2.15 times more volatile than Caledonia Mining. It trades about 0.04 of its potential returns per unit of risk. Caledonia Mining is currently generating about 0.03 per unit of risk. If you would invest 15.00 in Independence Gold Corp on September 2, 2024 and sell it today you would earn a total of 1.00 from holding Independence Gold Corp or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Independence Gold Corp vs. Caledonia Mining
Performance |
| Timeline |
| Independence Gold Corp |
| Caledonia Mining |
Independence Gold and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Independence Gold and Caledonia Mining
The main advantage of trading using opposite Independence Gold and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Independence Gold 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.| Independence Gold vs. Heliostar Metals | Independence Gold vs. Revival Gold | Independence Gold vs. Cabral Gold | Independence Gold vs. Cassiar Gold Corp |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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