Correlation Between US Gold and Snowline Gold
Can any of the company-specific risk be diversified away by investing in both US Gold and Snowline 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 Snowline 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 Snowline Gold Corp, you can compare the effects of market volatilities on US Gold and Snowline 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 Snowline Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Gold and Snowline Gold.
Diversification Opportunities for US Gold and Snowline Gold
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between USAU and Snowline is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding US Gold Corp and Snowline Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snowline Gold 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 Snowline Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snowline Gold Corp has no effect on the direction of US Gold i.e., US Gold and Snowline Gold go up and down completely randomly.
Pair Corralation between US Gold and Snowline Gold
Given the investment horizon of 90 days US Gold Corp is expected to under-perform the Snowline Gold. In addition to that, US Gold is 1.32 times more volatile than Snowline Gold Corp. It trades about -0.14 of its total potential returns per unit of risk. Snowline Gold Corp is currently generating about -0.06 per unit of volatility. If you would invest 367.00 in Snowline Gold Corp on September 19, 2024 and sell it today you would lose (16.00) from holding Snowline Gold Corp or give up 4.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
US Gold Corp vs. Snowline Gold Corp
Performance |
| Timeline |
| US Gold Corp |
| Snowline Gold Corp |
US Gold and Snowline Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Gold and Snowline Gold
The main advantage of trading using opposite US Gold and Snowline Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Gold position performs unexpectedly, Snowline 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 Snowline Gold will offset losses from the drop in Snowline Gold's long position.| US Gold vs. Olympic Steel | US Gold vs. Steel Dynamics | US Gold vs. Commercial Metals | US Gold vs. Nucor Corp |
| Snowline Gold vs. Galiano Gold | Snowline Gold vs. US Gold Corp | Snowline Gold vs. HUMANA INC | Snowline 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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