Correlation Between NYSE Composite and US GoldMining
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and US 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 NYSE Composite and US GoldMining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and US GoldMining Warrant, you can compare the effects of market volatilities on NYSE Composite and US 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 NYSE Composite with a short position of US GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and US GoldMining.
Diversification Opportunities for NYSE Composite and US GoldMining
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and USGOW is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and US GoldMining Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US GoldMining Warrant and NYSE Composite 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 NYSE Composite are associated (or correlated) with US GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US GoldMining Warrant has no effect on the direction of NYSE Composite i.e., NYSE Composite and US GoldMining go up and down completely randomly.
Pair Corralation between NYSE Composite and US GoldMining
Assuming the 90 days trading horizon NYSE Composite is expected to generate 8.33 times less return on investment than US GoldMining. But when comparing it to its historical volatility, NYSE Composite is 21.94 times less risky than US GoldMining. It trades about 0.14 of its potential returns per unit of risk. US GoldMining Warrant is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 280.00 in US GoldMining Warrant on August 25, 2024 and sell it today you would lose (100.00) from holding US GoldMining Warrant or give up 35.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.8% |
| Values | Daily Returns |
NYSE Composite vs. US GoldMining Warrant
Performance |
| Timeline |
NYSE Composite and US GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
US GoldMining Warrant
Pair trading matchups for US GoldMining
Pair Trading with NYSE Composite and US GoldMining
The main advantage of trading using opposite NYSE Composite and US GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, US 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 US GoldMining will offset losses from the drop in US GoldMining's long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| US GoldMining vs. Vale SA ADR | US GoldMining vs. Teck Resources Ltd | US GoldMining vs. MP Materials Corp | US GoldMining vs. BHP Group Limited |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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