Correlation Between US Gold and Cabral Gold
Can any of the company-specific risk be diversified away by investing in both US Gold and Cabral 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 US Gold and Cabral Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Gold Corp and Cabral Gold, you can compare the effects of market volatilities on US Gold and Cabral 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 US Gold with a short position of Cabral Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Gold and Cabral Gold.
Diversification Opportunities for US Gold and Cabral Gold
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between USAU and Cabral is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding US Gold Corp and Cabral Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabral Gold and US 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 US Gold Corp are associated (or correlated) with Cabral Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabral Gold has no effect on the direction of US Gold i.e., US Gold and Cabral Gold go up and down completely randomly.
Pair Corralation between US Gold and Cabral Gold
Given the investment horizon of 90 days US Gold Corp is expected to generate 0.54 times more return on investment than Cabral Gold. However, US Gold Corp is 1.86 times less risky than Cabral Gold. It trades about 0.05 of its potential returns per unit of risk. Cabral Gold is currently generating about -0.1 per unit of risk. If you would invest 640.00 in US Gold Corp on September 19, 2024 and sell it today you would earn a total of 38.00 from holding US Gold Corp or generate 5.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.62% |
| Values | Daily Returns |
US Gold Corp vs. Cabral Gold
Performance |
| Timeline |
| US Gold Corp |
| Cabral Gold |
US Gold and Cabral Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Gold and Cabral Gold
The main advantage of trading using opposite US Gold and Cabral Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Gold position performs unexpectedly, Cabral 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 Cabral Gold will offset losses from the drop in Cabral Gold's long position.| US Gold vs. Olympic Steel | US Gold vs. Steel Dynamics | US Gold vs. Commercial Metals | US Gold vs. Nucor Corp |
| Cabral Gold vs. Galiano Gold | Cabral Gold vs. US Gold Corp | Cabral Gold vs. HUMANA INC | Cabral Gold vs. Barloworld Ltd ADR |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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