Correlation Between Precipitate Gold and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Precipitate Gold and Caledonia Mining 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 Precipitate Gold and Caledonia Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precipitate Gold Corp and Caledonia Mining, you can compare the effects of market volatilities on Precipitate Gold and Caledonia Mining 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 Precipitate Gold with a short position of Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precipitate Gold and Caledonia Mining.
Diversification Opportunities for Precipitate Gold and Caledonia Mining
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Precipitate and Caledonia is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Precipitate Gold Corp and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining and Precipitate 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 Precipitate Gold Corp are associated (or correlated) with Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Precipitate Gold i.e., Precipitate Gold and Caledonia Mining go up and down completely randomly.
Pair Corralation between Precipitate Gold and Caledonia Mining
Assuming the 90 days horizon Precipitate Gold Corp is expected to generate 2.02 times more return on investment than Caledonia Mining. However, Precipitate Gold is 2.02 times more volatile than Caledonia Mining. It trades about 0.07 of its potential returns per unit of risk. Caledonia Mining is currently generating about -0.46 per unit of risk. If you would invest 4.71 in Precipitate Gold Corp on August 29, 2024 and sell it today you would earn a total of 0.29 from holding Precipitate Gold Corp or generate 6.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precipitate Gold Corp vs. Caledonia Mining
Performance |
| Timeline |
| Precipitate Gold Corp |
| Caledonia Mining |
Precipitate Gold and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precipitate Gold and Caledonia Mining
The main advantage of trading using opposite Precipitate Gold and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precipitate Gold position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| Precipitate Gold vs. Silver Hammer Mining | Precipitate Gold vs. Reyna Silver Corp | Precipitate Gold vs. Guanajuato Silver | Precipitate Gold vs. Silver One Resources |
| Caledonia Mining vs. DRDGOLD Limited ADR | Caledonia Mining vs. Galiano Gold | Caledonia Mining vs. Mastech Holdings | Caledonia Mining vs. EMX Royalty 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |