Correlation Between Magnum Goldcorp and New Destiny
Can any of the company-specific risk be diversified away by investing in both Magnum Goldcorp and New Destiny 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 New Destiny into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnum Goldcorp and New Destiny Mining, you can compare the effects of market volatilities on Magnum Goldcorp and New Destiny 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 New Destiny. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnum Goldcorp and New Destiny.
Diversification Opportunities for Magnum Goldcorp and New Destiny
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Magnum and New is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Magnum Goldcorp and New Destiny Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Destiny Mining 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 New Destiny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Destiny Mining has no effect on the direction of Magnum Goldcorp i.e., Magnum Goldcorp and New Destiny go up and down completely randomly.
Pair Corralation between Magnum Goldcorp and New Destiny
Assuming the 90 days horizon Magnum Goldcorp is expected to generate 2.71 times more return on investment than New Destiny. However, Magnum Goldcorp is 2.71 times more volatile than New Destiny Mining. It trades about -0.03 of its potential returns per unit of risk. New Destiny Mining is currently generating about -0.3 per unit of risk. If you would invest 8.00 in Magnum Goldcorp on August 30, 2024 and sell it today you would lose (3.00) from holding Magnum Goldcorp or give up 37.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnum Goldcorp vs. New Destiny Mining
Performance |
| Timeline |
| Magnum Goldcorp |
| New Destiny Mining |
Magnum Goldcorp and New Destiny Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnum Goldcorp and New Destiny
The main advantage of trading using opposite Magnum Goldcorp and New Destiny positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnum Goldcorp position performs unexpectedly, New Destiny 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 Destiny will offset losses from the drop in New Destiny's long position.| Magnum Goldcorp vs. Data Communications Management | Magnum Goldcorp vs. Cogeco Communications | Magnum Goldcorp vs. First National Financial | Magnum Goldcorp vs. Intact Financial Corp |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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