Correlation Between Smithson Investment and GoldMining
Can any of the company-specific risk be diversified away by investing in both Smithson Investment 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 Smithson Investment and GoldMining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smithson Investment Trust and GoldMining, you can compare the effects of market volatilities on Smithson Investment 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 Smithson Investment with a short position of GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithson Investment and GoldMining.
Diversification Opportunities for Smithson Investment and GoldMining
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Smithson and GoldMining is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Smithson Investment Trust and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and Smithson Investment 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 Smithson Investment Trust 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 Smithson Investment i.e., Smithson Investment and GoldMining go up and down completely randomly.
Pair Corralation between Smithson Investment and GoldMining
Assuming the 90 days trading horizon Smithson Investment Trust is expected to generate 0.51 times more return on investment than GoldMining. However, Smithson Investment Trust is 1.94 times less risky than GoldMining. It trades about 0.27 of its potential returns per unit of risk. GoldMining is currently generating about -0.03 per unit of risk. If you would invest 148,600 in Smithson Investment Trust on November 3, 2024 and sell it today you would earn a total of 7,400 from holding Smithson Investment Trust or generate 4.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 65.22% |
| Values | Daily Returns |
Smithson Investment Trust vs. GoldMining
Performance |
| Timeline |
| Smithson Investment Trust |
| GoldMining |
Smithson Investment and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smithson Investment and GoldMining
The main advantage of trading using opposite Smithson Investment and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smithson Investment 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.| Smithson Investment vs. Bloomsbury Publishing Plc | Smithson Investment vs. Monks Investment Trust | Smithson Investment vs. Lindsell Train Investment | Smithson Investment vs. Creo Medical Group |
| GoldMining vs. Summit Materials Cl | GoldMining vs. First Majestic Silver | GoldMining vs. Qurate Retail Series | GoldMining vs. Lundin Mining 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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