Correlation Between US Gold and Makara Mining
Can any of the company-specific risk be diversified away by investing in both US Gold and Makara Mining 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 Makara Mining 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 Makara Mining Corp, you can compare the effects of market volatilities on US Gold and Makara Mining 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 Makara Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Gold and Makara Mining.
Diversification Opportunities for US Gold and Makara Mining
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between USAU and Makara is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding US Gold Corp and Makara Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Makara Mining Corp 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 Makara Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Makara Mining Corp has no effect on the direction of US Gold i.e., US Gold and Makara Mining go up and down completely randomly.
Pair Corralation between US Gold and Makara Mining
Given the investment horizon of 90 days US Gold is expected to generate 3.85 times less return on investment than Makara Mining. But when comparing it to its historical volatility, US Gold Corp is 4.48 times less risky than Makara Mining. It trades about 0.21 of its potential returns per unit of risk. Makara Mining Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Makara Mining Corp on September 13, 2024 and sell it today you would earn a total of 2.80 from holding Makara Mining Corp or generate 46.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
US Gold Corp vs. Makara Mining Corp
Performance |
| Timeline |
| US Gold Corp |
| Makara Mining Corp |
US Gold and Makara Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Gold and Makara Mining
The main advantage of trading using opposite US Gold and Makara Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Gold position performs unexpectedly, Makara Mining 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 Makara Mining will offset losses from the drop in Makara Mining's long position.| US Gold vs. Labrador Gold Corp | US Gold vs. Aurion Resources | US Gold vs. Puma Exploration | US Gold vs. Golden Star Resource |
| Makara Mining vs. Endurance Gold | Makara Mining vs. Sixty North Gold | Makara Mining vs. St James Gold | Makara Mining vs. Liberty Gold Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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