Correlation Between Steppe Gold and Westward Gold
Can any of the company-specific risk be diversified away by investing in both Steppe Gold and Westward 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 Steppe Gold and Westward Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steppe Gold and Westward Gold, you can compare the effects of market volatilities on Steppe Gold and Westward 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 Steppe Gold with a short position of Westward Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steppe Gold and Westward Gold.
Diversification Opportunities for Steppe Gold and Westward Gold
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Steppe and Westward is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Steppe Gold and Westward Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westward Gold and Steppe 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 Steppe Gold are associated (or correlated) with Westward Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westward Gold has no effect on the direction of Steppe Gold i.e., Steppe Gold and Westward Gold go up and down completely randomly.
Pair Corralation between Steppe Gold and Westward Gold
Assuming the 90 days horizon Steppe Gold is expected to under-perform the Westward Gold. But the otc stock apears to be less risky and, when comparing its historical volatility, Steppe Gold is 3.12 times less risky than Westward Gold. The otc stock trades about -0.3 of its potential returns per unit of risk. The Westward Gold is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5.50 in Westward Gold on September 2, 2024 and sell it today you would lose (0.19) from holding Westward Gold or give up 3.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steppe Gold vs. Westward Gold
Performance |
| Timeline |
| Steppe Gold |
| Westward Gold |
Steppe Gold and Westward Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steppe Gold and Westward Gold
The main advantage of trading using opposite Steppe Gold and Westward Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steppe Gold position performs unexpectedly, Westward 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 Westward Gold will offset losses from the drop in Westward Gold's long position.| Steppe Gold vs. Maple Gold Mines | Steppe Gold vs. Caledonia Mining | Steppe Gold vs. Fortuna Silver Mines | Steppe Gold vs. Sandstorm Gold Ltd |
| Westward Gold vs. Aurion Resources | Westward Gold vs. Rio2 Limited | Westward Gold vs. Palamina Corp | Westward Gold vs. Grande Portage Resources |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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