Correlation Between Torex Gold and Ero Copper
Can any of the company-specific risk be diversified away by investing in both Torex Gold and Ero Copper 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 Torex Gold and Ero Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Torex Gold Resources and Ero Copper Corp, you can compare the effects of market volatilities on Torex Gold and Ero Copper 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 Torex Gold with a short position of Ero Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Torex Gold and Ero Copper.
Diversification Opportunities for Torex Gold and Ero Copper
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Torex and Ero is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Torex Gold Resources and Ero Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ero Copper Corp and Torex 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 Torex Gold Resources are associated (or correlated) with Ero Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ero Copper Corp has no effect on the direction of Torex Gold i.e., Torex Gold and Ero Copper go up and down completely randomly.
Pair Corralation between Torex Gold and Ero Copper
Assuming the 90 days trading horizon Torex Gold Resources is expected to generate 0.96 times more return on investment than Ero Copper. However, Torex Gold Resources is 1.04 times less risky than Ero Copper. It trades about 0.11 of its potential returns per unit of risk. Ero Copper Corp is currently generating about 0.01 per unit of risk. If you would invest 1,323 in Torex Gold Resources on August 29, 2024 and sell it today you would earn a total of 1,605 from holding Torex Gold Resources or generate 121.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Torex Gold Resources vs. Ero Copper Corp
Performance |
| Timeline |
| Torex Gold Resources |
| Ero Copper Corp |
Torex Gold and Ero Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Torex Gold and Ero Copper
The main advantage of trading using opposite Torex Gold and Ero Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Torex Gold position performs unexpectedly, Ero Copper 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 Ero Copper will offset losses from the drop in Ero Copper's long position.| Torex Gold vs. OceanaGold | Torex Gold vs. Wesdome Gold Mines | Torex Gold vs. Centerra Gold | Torex Gold vs. Alamos Gold |
| Ero Copper vs. SSR Mining | Ero Copper vs. MAG Silver Corp | Ero Copper vs. Torex Gold Resources | Ero Copper vs. Pan American Silver |
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 CEOs Directory module to screen CEOs from public companies around the world.
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