Correlation Between Kinross Gold and New Gold
Can any of the company-specific risk be diversified away by investing in both Kinross Gold and New Gold 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 Kinross Gold and New Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinross Gold and New Gold, you can compare the effects of market volatilities on Kinross Gold and New Gold 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 Kinross Gold with a short position of New Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinross Gold and New Gold.
Diversification Opportunities for Kinross Gold and New Gold
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kinross and New is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kinross Gold and New Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Gold and Kinross 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 Kinross Gold are associated (or correlated) with New Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Gold has no effect on the direction of Kinross Gold i.e., Kinross Gold and New Gold go up and down completely randomly.
Pair Corralation between Kinross Gold and New Gold
Considering the 90-day investment horizon Kinross Gold is expected to generate 1.16 times less return on investment than New Gold. But when comparing it to its historical volatility, Kinross Gold is 1.43 times less risky than New Gold. It trades about 0.09 of its potential returns per unit of risk. New Gold is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 109.00 in New Gold on August 28, 2024 and sell it today you would earn a total of 157.00 from holding New Gold or generate 144.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinross Gold vs. New Gold
Performance |
| Timeline |
| Kinross Gold |
| New Gold |
Kinross Gold and New Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinross Gold and New Gold
The main advantage of trading using opposite Kinross Gold and New Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinross Gold position performs unexpectedly, New Gold 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 New Gold will offset losses from the drop in New Gold's long position.| Kinross Gold vs. Pan American Silver | Kinross Gold vs. Newmont Goldcorp Corp | Kinross Gold vs. Wheaton Precious Metals | Kinross Gold vs. Franco Nevada |
| New Gold vs. Eldorado Gold Corp | New Gold vs. Kinross Gold | New Gold vs. Harmony Gold Mining | New Gold vs. Coeur Mining |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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