Correlation Between New Gold and United States
Can any of the company-specific risk be diversified away by investing in both New Gold and United States 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 New Gold and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Gold and United States Steel, you can compare the effects of market volatilities on New Gold and United States 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 New Gold with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Gold and United States.
Diversification Opportunities for New Gold and United States
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between New and United is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding New Gold and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel and New 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 New Gold are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of New Gold i.e., New Gold and United States go up and down completely randomly.
Pair Corralation between New Gold and United States
Considering the 90-day investment horizon New Gold is expected to generate 1.11 times more return on investment than United States. However, New Gold is 1.11 times more volatile than United States Steel. It trades about 0.09 of its potential returns per unit of risk. United States Steel is currently generating about 0.03 per unit of risk. If you would invest 205.00 in New Gold on September 3, 2024 and sell it today you would earn a total of 67.00 from holding New Gold or generate 32.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Gold vs. United States Steel
Performance |
| Timeline |
| New Gold |
| United States Steel |
New Gold and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Gold and United States
The main advantage of trading using opposite New Gold and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Gold position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| New Gold vs. Eldorado Gold Corp | New Gold vs. Kinross Gold | New Gold vs. Harmony Gold Mining | New Gold vs. Coeur Mining |
| United States vs. Nucor Corp | United States vs. Steel Dynamics | United States vs. ArcelorMittal SA ADR | United States vs. Gerdau SA ADR |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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