Correlation Between Trainline Plc and GoldMining
Can any of the company-specific risk be diversified away by investing in both Trainline Plc 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 Trainline Plc and GoldMining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trainline Plc and GoldMining, you can compare the effects of market volatilities on Trainline Plc 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 Trainline Plc with a short position of GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trainline Plc and GoldMining.
Diversification Opportunities for Trainline Plc and GoldMining
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Trainline and GoldMining is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Trainline Plc and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and Trainline Plc 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 Trainline Plc 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 Trainline Plc i.e., Trainline Plc and GoldMining go up and down completely randomly.
Pair Corralation between Trainline Plc and GoldMining
Assuming the 90 days trading horizon Trainline Plc is expected to generate 0.73 times more return on investment than GoldMining. However, Trainline Plc is 1.37 times less risky than GoldMining. It trades about 0.07 of its potential returns per unit of risk. GoldMining is currently generating about 0.01 per unit of risk. If you would invest 39,700 in Trainline Plc on September 3, 2024 and sell it today you would earn a total of 1,080 from holding Trainline Plc or generate 2.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 61.9% |
| Values | Daily Returns |
Trainline Plc vs. GoldMining
Performance |
| Timeline |
| Trainline Plc |
| GoldMining |
Trainline Plc and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trainline Plc and GoldMining
The main advantage of trading using opposite Trainline Plc and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trainline Plc 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.| Trainline Plc vs. GoldMining | Trainline Plc vs. Metals Exploration Plc | Trainline Plc vs. Panther Metals PLC | Trainline Plc vs. Endeavour Mining Corp |
| GoldMining vs. Catalyst Media Group | GoldMining vs. CATLIN GROUP | GoldMining vs. Magnora ASA | GoldMining vs. RTW Venture Fund |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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