Correlation Between Paramount Gold and Golden Star
Can any of the company-specific risk be diversified away by investing in both Paramount Gold and Golden Star 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 Paramount Gold and Golden Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paramount Gold Nevada and Golden Star Resource, you can compare the effects of market volatilities on Paramount Gold and Golden Star 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 Paramount Gold with a short position of Golden Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Gold and Golden Star.
Diversification Opportunities for Paramount Gold and Golden Star
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Paramount and Golden is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Gold Nevada and Golden Star Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Star Resource and Paramount 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 Paramount Gold Nevada are associated (or correlated) with Golden Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Star Resource has no effect on the direction of Paramount Gold i.e., Paramount Gold and Golden Star go up and down completely randomly.
Pair Corralation between Paramount Gold and Golden Star
Considering the 90-day investment horizon Paramount Gold is expected to generate 4.21 times less return on investment than Golden Star. But when comparing it to its historical volatility, Paramount Gold Nevada is 3.19 times less risky than Golden Star. It trades about 0.02 of its potential returns per unit of risk. Golden Star Resource is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 220.00 in Golden Star Resource on August 30, 2024 and sell it today you would lose (105.00) from holding Golden Star Resource or give up 47.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Paramount Gold Nevada vs. Golden Star Resource
Performance |
| Timeline |
| Paramount Gold Nevada |
| Golden Star Resource |
Paramount Gold and Golden Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paramount Gold and Golden Star
The main advantage of trading using opposite Paramount Gold and Golden Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Gold position performs unexpectedly, Golden Star 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 Golden Star will offset losses from the drop in Golden Star's long position.| Paramount Gold vs. Vista Gold | Paramount Gold vs. International Tower Hill | Paramount Gold vs. Avino Silver Gold | Paramount Gold vs. Seabridge Gold |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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