Correlation Between Japan Gold and Gold Bull
Can any of the company-specific risk be diversified away by investing in both Japan Gold and Gold Bull 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 Japan Gold and Gold Bull into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Gold Corp and Gold Bull Resources, you can compare the effects of market volatilities on Japan Gold and Gold Bull 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 Japan Gold with a short position of Gold Bull. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Gold and Gold Bull.
Diversification Opportunities for Japan Gold and Gold Bull
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Japan and Gold is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Japan Gold Corp and Gold Bull Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bull Resources and Japan 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 Japan Gold Corp are associated (or correlated) with Gold Bull. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bull Resources has no effect on the direction of Japan Gold i.e., Japan Gold and Gold Bull go up and down completely randomly.
Pair Corralation between Japan Gold and Gold Bull
Assuming the 90 days horizon Japan Gold Corp is expected to generate 1.53 times more return on investment than Gold Bull. However, Japan Gold is 1.53 times more volatile than Gold Bull Resources. It trades about -0.02 of its potential returns per unit of risk. Gold Bull Resources is currently generating about -0.41 per unit of risk. If you would invest 5.80 in Japan Gold Corp on September 1, 2024 and sell it today you would lose (0.40) from holding Japan Gold Corp or give up 6.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Gold Corp vs. Gold Bull Resources
Performance |
| Timeline |
| Japan Gold Corp |
| Gold Bull Resources |
Japan Gold and Gold Bull Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Gold and Gold Bull
The main advantage of trading using opposite Japan Gold and Gold Bull positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Gold position performs unexpectedly, Gold Bull 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 Gold Bull will offset losses from the drop in Gold Bull's long position.| Japan Gold vs. Aurion Resources | Japan Gold vs. Rio2 Limited | Japan Gold vs. Palamina Corp | Japan Gold vs. BTU Metals Corp |
| Gold Bull vs. Robex Resources | Gold Bull vs. Orefinders Resources | Gold Bull vs. Leviathan Gold | Gold Bull vs. Rover Metals 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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