Correlation Between Sixty North and Cerrado Gold
Can any of the company-specific risk be diversified away by investing in both Sixty North and Cerrado 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 Sixty North and Cerrado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sixty North Gold and Cerrado Gold, you can compare the effects of market volatilities on Sixty North and Cerrado 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 Sixty North with a short position of Cerrado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sixty North and Cerrado Gold.
Diversification Opportunities for Sixty North and Cerrado Gold
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sixty and Cerrado is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sixty North Gold and Cerrado Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cerrado Gold and Sixty North 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 Sixty North Gold are associated (or correlated) with Cerrado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cerrado Gold has no effect on the direction of Sixty North i.e., Sixty North and Cerrado Gold go up and down completely randomly.
Pair Corralation between Sixty North and Cerrado Gold
Assuming the 90 days horizon Sixty North Gold is expected to generate 3.97 times more return on investment than Cerrado Gold. However, Sixty North is 3.97 times more volatile than Cerrado Gold. It trades about 0.12 of its potential returns per unit of risk. Cerrado Gold is currently generating about 0.08 per unit of risk. If you would invest 10.00 in Sixty North Gold on September 14, 2024 and sell it today you would lose (3.00) from holding Sixty North Gold or give up 30.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sixty North Gold vs. Cerrado Gold
Performance |
| Timeline |
| Sixty North Gold |
| Cerrado Gold |
Sixty North and Cerrado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sixty North and Cerrado Gold
The main advantage of trading using opposite Sixty North and Cerrado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sixty North position performs unexpectedly, Cerrado 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 Cerrado Gold will offset losses from the drop in Cerrado Gold's long position.| Sixty North vs. Revival Gold | Sixty North vs. Galiano Gold | Sixty North vs. US Gold Corp | Sixty North vs. HUMANA INC |
| Cerrado Gold vs. Revival Gold | Cerrado Gold vs. Galiano Gold | Cerrado Gold vs. US Gold Corp | Cerrado Gold vs. HUMANA INC |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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