Correlation Between Independence Gold and South32
Can any of the company-specific risk be diversified away by investing in both Independence Gold and South32 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 South32 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 South32 Limited, you can compare the effects of market volatilities on Independence Gold and South32 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 South32. Check out your portfolio center. Please also check ongoing floating volatility patterns of Independence Gold and South32.
Diversification Opportunities for Independence Gold and South32
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Independence and South32 is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Independence Gold Corp and South32 Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South32 Limited 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 South32. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South32 Limited has no effect on the direction of Independence Gold i.e., Independence Gold and South32 go up and down completely randomly.
Pair Corralation between Independence Gold and South32
Assuming the 90 days horizon Independence Gold Corp is expected to generate 10.8 times more return on investment than South32. However, Independence Gold is 10.8 times more volatile than South32 Limited. It trades about 0.05 of its potential returns per unit of risk. South32 Limited is currently generating about 0.01 per unit of risk. If you would invest 6.68 in Independence Gold Corp on September 3, 2024 and sell it today you would earn a total of 9.32 from holding Independence Gold Corp or generate 139.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 80.0% |
| Values | Daily Returns |
Independence Gold Corp vs. South32 Limited
Performance |
| Timeline |
| Independence Gold Corp |
| South32 Limited |
Independence Gold and South32 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Independence Gold and South32
The main advantage of trading using opposite Independence Gold and South32 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Independence Gold position performs unexpectedly, South32 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 South32 will offset losses from the drop in South32's long position.| Independence Gold vs. Heliostar Metals | Independence Gold vs. Revival Gold | Independence Gold vs. Cabral Gold | Independence Gold vs. Cassiar Gold Corp |
| South32 vs. IGO Limited | South32 vs. Anglo American PLC | South32 vs. TNG Limited | South32 vs. Amarc Resources |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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