Correlation Between Power Metal and GoldMining
Can any of the company-specific risk be diversified away by investing in both Power Metal 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 Power Metal and GoldMining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Metal Resources and GoldMining, you can compare the effects of market volatilities on Power Metal 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 Power Metal with a short position of GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Metal and GoldMining.
Diversification Opportunities for Power Metal and GoldMining
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Power and GoldMining is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Power Metal Resources and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and Power Metal 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 Power Metal Resources 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 Power Metal i.e., Power Metal and GoldMining go up and down completely randomly.
Pair Corralation between Power Metal and GoldMining
Assuming the 90 days trading horizon Power Metal Resources is expected to under-perform the GoldMining. But the stock apears to be less risky and, when comparing its historical volatility, Power Metal Resources is 1.45 times less risky than GoldMining. The stock trades about -0.09 of its potential returns per unit of risk. The GoldMining is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 119.00 in GoldMining on January 22, 2025 and sell it today you would lose (4.00) from holding GoldMining or give up 3.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 80.0% |
| Values | Daily Returns |
Power Metal Resources vs. GoldMining
Performance |
| Timeline |
| Power Metal Resources |
| GoldMining |
Power Metal and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Metal and GoldMining
The main advantage of trading using opposite Power Metal and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Metal 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.| Power Metal vs. Givaudan SA | Power Metal vs. Antofagasta PLC | Power Metal vs. EVRAZ plc | Power Metal vs. Atalaya Mining |
| GoldMining vs. Rockfire Resources plc | GoldMining vs. Ikigai Ventures | GoldMining vs. Falcon Oil Gas | GoldMining vs. Pantheon Resources |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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