Correlation Between Neometals and GoldMining
Can any of the company-specific risk be diversified away by investing in both Neometals and GoldMining 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 Neometals and GoldMining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neometals and GoldMining, you can compare the effects of market volatilities on Neometals and GoldMining 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 Neometals with a short position of GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neometals and GoldMining.
Diversification Opportunities for Neometals and GoldMining
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Neometals and GoldMining is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Neometals and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and Neometals 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 Neometals are associated (or correlated) with GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Neometals i.e., Neometals and GoldMining go up and down completely randomly.
Pair Corralation between Neometals and GoldMining
Assuming the 90 days trading horizon Neometals is expected to generate 0.33 times more return on investment than GoldMining. However, Neometals is 2.99 times less risky than GoldMining. It trades about -0.22 of its potential returns per unit of risk. GoldMining is currently generating about -0.21 per unit of risk. If you would invest 500.00 in Neometals on August 28, 2024 and sell it today you would lose (25.00) from holding Neometals or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 61.9% |
| Values | Daily Returns |
Neometals vs. GoldMining
Performance |
| Timeline |
| Neometals |
| GoldMining |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Neometals and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neometals and GoldMining
The main advantage of trading using opposite Neometals and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neometals position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| Neometals vs. Givaudan SA | Neometals vs. Antofagasta PLC | Neometals vs. Centamin PLC | Neometals vs. Atalaya Mining |
| GoldMining vs. Samsung Electronics Co | GoldMining vs. Samsung Electronics Co | GoldMining vs. Hyundai Motor | GoldMining vs. Toyota Motor 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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