Correlation Between Maple Gold and Galway Metals
Can any of the company-specific risk be diversified away by investing in both Maple Gold and Galway Metals 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 Maple Gold and Galway Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maple Gold Mines and Galway Metals, you can compare the effects of market volatilities on Maple Gold and Galway Metals 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 Maple Gold with a short position of Galway Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Gold and Galway Metals.
Diversification Opportunities for Maple Gold and Galway Metals
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Maple and Galway is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Maple Gold Mines and Galway Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galway Metals and Maple 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 Maple Gold Mines are associated (or correlated) with Galway Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galway Metals has no effect on the direction of Maple Gold i.e., Maple Gold and Galway Metals go up and down completely randomly.
Pair Corralation between Maple Gold and Galway Metals
Assuming the 90 days horizon Maple Gold Mines is expected to generate 1.14 times more return on investment than Galway Metals. However, Maple Gold is 1.14 times more volatile than Galway Metals. It trades about -0.12 of its potential returns per unit of risk. Galway Metals is currently generating about -0.17 per unit of risk. If you would invest 7.50 in Maple Gold Mines on August 26, 2024 and sell it today you would lose (1.50) from holding Maple Gold Mines or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Gold Mines vs. Galway Metals
Performance |
| Timeline |
| Maple Gold Mines |
| Galway Metals |
Maple Gold and Galway Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Gold and Galway Metals
The main advantage of trading using opposite Maple Gold and Galway Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Gold position performs unexpectedly, Galway Metals 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 Galway Metals will offset losses from the drop in Galway Metals' long position.| Maple Gold vs. Liberty Gold Corp | Maple Gold vs. Cartier Resources | Maple Gold vs. Banyan Gold Corp | Maple Gold vs. Maritime Resources Corp |
| Galway Metals vs. Cartier Resources | Galway Metals vs. Tristar Gold | Galway Metals vs. Maritime Resources Corp | Galway Metals vs. Banyan Gold 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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