Correlation Between US GoldMining and BHP Group
Can any of the company-specific risk be diversified away by investing in both US GoldMining and BHP Group 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 GoldMining and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US GoldMining Warrant and BHP Group Limited, you can compare the effects of market volatilities on US GoldMining and BHP Group 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 GoldMining with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of US GoldMining and BHP Group.
Diversification Opportunities for US GoldMining and BHP Group
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between USGOW and BHP is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding US GoldMining Warrant and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited and US GoldMining 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 GoldMining Warrant are associated (or correlated) with BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of US GoldMining i.e., US GoldMining and BHP Group go up and down completely randomly.
Pair Corralation between US GoldMining and BHP Group
Assuming the 90 days horizon US GoldMining Warrant is expected to generate 11.66 times more return on investment than BHP Group. However, US GoldMining is 11.66 times more volatile than BHP Group Limited. It trades about 0.19 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.29 per unit of risk. If you would invest 130.00 in US GoldMining Warrant on August 29, 2024 and sell it today you would earn a total of 75.00 from holding US GoldMining Warrant or generate 57.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US GoldMining Warrant vs. BHP Group Limited
Performance |
| Timeline |
| US GoldMining Warrant |
| BHP Group Limited |
US GoldMining and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US GoldMining and BHP Group
The main advantage of trading using opposite US GoldMining and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US GoldMining position performs unexpectedly, BHP Group 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 BHP Group will offset losses from the drop in BHP Group's long position.| US GoldMining vs. The Gap, | US GoldMining vs. MGIC Investment Corp | US GoldMining vs. Assurant | US GoldMining vs. ICC Holdings |
| BHP Group vs. Vale SA ADR | BHP Group vs. Teck Resources Ltd | BHP Group vs. Lithium Americas Corp | BHP Group vs. MP Materials 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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