Correlation Between Magnum Goldcorp and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Magnum Goldcorp and Algoma Steel 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 Magnum Goldcorp and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnum Goldcorp and Algoma Steel Group, you can compare the effects of market volatilities on Magnum Goldcorp and Algoma Steel 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 Magnum Goldcorp with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnum Goldcorp and Algoma Steel.
Diversification Opportunities for Magnum Goldcorp and Algoma Steel
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Magnum and Algoma is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Magnum Goldcorp and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel Group and Magnum Goldcorp 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 Magnum Goldcorp are associated (or correlated) with Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of Magnum Goldcorp i.e., Magnum Goldcorp and Algoma Steel go up and down completely randomly.
Pair Corralation between Magnum Goldcorp and Algoma Steel
Assuming the 90 days horizon Magnum Goldcorp is expected to generate 11.68 times more return on investment than Algoma Steel. However, Magnum Goldcorp is 11.68 times more volatile than Algoma Steel Group. It trades about 0.11 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.02 per unit of risk. If you would invest 4.00 in Magnum Goldcorp on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Magnum Goldcorp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnum Goldcorp vs. Algoma Steel Group
Performance |
| Timeline |
| Magnum Goldcorp |
| Algoma Steel Group |
Magnum Goldcorp and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnum Goldcorp and Algoma Steel
The main advantage of trading using opposite Magnum Goldcorp and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnum Goldcorp position performs unexpectedly, Algoma Steel 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 Algoma Steel will offset losses from the drop in Algoma Steel's long position.| Magnum Goldcorp vs. Bank of Nova | Magnum Goldcorp vs. Olympia Financial Group | Magnum Goldcorp vs. Information Services | Magnum Goldcorp vs. First National Financial |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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