Correlation Between Snowline Gold and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Snowline 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 Snowline 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 Snowline Gold Corp and Caledonia Mining, you can compare the effects of market volatilities on Snowline 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 Snowline Gold with a short position of Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snowline Gold and Caledonia Mining.
Diversification Opportunities for Snowline Gold and Caledonia Mining
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snowline and Caledonia is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Snowline 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 Snowline 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 Snowline 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 Snowline Gold i.e., Snowline Gold and Caledonia Mining go up and down completely randomly.
Pair Corralation between Snowline Gold and Caledonia Mining
Assuming the 90 days horizon Snowline Gold Corp is expected to generate 0.68 times more return on investment than Caledonia Mining. However, Snowline Gold Corp is 1.46 times less risky than Caledonia Mining. It trades about -0.14 of its potential returns per unit of risk. Caledonia Mining is currently generating about -0.4 per unit of risk. If you would invest 416.00 in Snowline Gold Corp on September 2, 2024 and sell it today you would lose (34.00) from holding Snowline Gold Corp or give up 8.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snowline Gold Corp vs. Caledonia Mining
Performance |
| Timeline |
| Snowline Gold Corp |
| Caledonia Mining |
Snowline Gold and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snowline Gold and Caledonia Mining
The main advantage of trading using opposite Snowline Gold and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snowline 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.| Snowline Gold vs. Heliostar Metals | Snowline Gold vs. Independence Gold Corp | Snowline Gold vs. Westward Gold | Snowline Gold vs. Cabral Gold |
| 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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