Correlation Between Sandfire Resources and Marvel Gold
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and Marvel Gold 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 Sandfire Resources and Marvel Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandfire Resources NL and Marvel Gold, you can compare the effects of market volatilities on Sandfire Resources and Marvel Gold 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 Sandfire Resources with a short position of Marvel Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Marvel Gold.
Diversification Opportunities for Sandfire Resources and Marvel Gold
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sandfire and Marvel is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and Marvel Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marvel Gold and Sandfire Resources 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 Sandfire Resources NL are associated (or correlated) with Marvel Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marvel Gold has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Marvel Gold go up and down completely randomly.
Pair Corralation between Sandfire Resources and Marvel Gold
Assuming the 90 days trading horizon Sandfire Resources is expected to generate 1.61 times less return on investment than Marvel Gold. But when comparing it to its historical volatility, Sandfire Resources NL is 4.05 times less risky than Marvel Gold. It trades about 0.16 of its potential returns per unit of risk. Marvel Gold is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.80 in Marvel Gold on September 3, 2024 and sell it today you would earn a total of 0.10 from holding Marvel Gold or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 92.31% |
| Values | Daily Returns |
Sandfire Resources NL vs. Marvel Gold
Performance |
| Timeline |
| Sandfire Resources |
| Marvel Gold |
Sandfire Resources and Marvel Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and Marvel Gold
The main advantage of trading using opposite Sandfire Resources and Marvel Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, Marvel Gold 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 Marvel Gold will offset losses from the drop in Marvel Gold's long position.| Sandfire Resources vs. Northern Star Resources | Sandfire Resources vs. Evolution Mining | Sandfire Resources vs. Bluescope Steel | Sandfire Resources vs. Aneka Tambang Tbk |
| Marvel Gold vs. Autosports Group | Marvel Gold vs. BTC Health Limited | Marvel Gold vs. Austco Healthcare | Marvel Gold vs. Carnegie Clean Energy |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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