Correlation Between MP Materials and Gold Resource
Can any of the company-specific risk be diversified away by investing in both MP Materials and Gold Resource 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 MP Materials and Gold Resource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MP Materials Corp and Gold Resource, you can compare the effects of market volatilities on MP Materials and Gold Resource 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 MP Materials with a short position of Gold Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of MP Materials and Gold Resource.
Diversification Opportunities for MP Materials and Gold Resource
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MP Materials and Gold is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding MP Materials Corp and Gold Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Resource and MP Materials 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 MP Materials Corp are associated (or correlated) with Gold Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Resource has no effect on the direction of MP Materials i.e., MP Materials and Gold Resource go up and down completely randomly.
Pair Corralation between MP Materials and Gold Resource
Allowing for the 90-day total investment horizon MP Materials Corp is expected to generate 0.43 times more return on investment than Gold Resource. However, MP Materials Corp is 2.33 times less risky than Gold Resource. It trades about 0.08 of its potential returns per unit of risk. Gold Resource is currently generating about -0.05 per unit of risk. If you would invest 1,613 in MP Materials Corp on September 1, 2024 and sell it today you would earn a total of 494.00 from holding MP Materials Corp or generate 30.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MP Materials Corp vs. Gold Resource
Performance |
| Timeline |
| MP Materials Corp |
| Gold Resource |
MP Materials and Gold Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MP Materials and Gold Resource
The main advantage of trading using opposite MP Materials and Gold Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MP Materials position performs unexpectedly, Gold Resource 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 Resource will offset losses from the drop in Gold Resource's long position.| MP Materials vs. Piedmont Lithium Ltd | MP Materials vs. Sigma Lithium Resources | MP Materials vs. Standard Lithium | MP Materials vs. Vale SA ADR |
| Gold Resource vs. IAMGold | Gold Resource vs. Eldorado Gold Corp | Gold Resource vs. Coeur Mining | Gold Resource vs. Alamos Gold |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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