Correlation Between Wesdome Gold and Champion Iron
Can any of the company-specific risk be diversified away by investing in both Wesdome Gold and Champion Iron 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 Wesdome Gold and Champion Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wesdome Gold Mines and Champion Iron, you can compare the effects of market volatilities on Wesdome Gold and Champion Iron 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 Wesdome Gold with a short position of Champion Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesdome Gold and Champion Iron.
Diversification Opportunities for Wesdome Gold and Champion Iron
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wesdome and Champion is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Wesdome Gold Mines and Champion Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron and Wesdome 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 Wesdome Gold Mines are associated (or correlated) with Champion Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Iron has no effect on the direction of Wesdome Gold i.e., Wesdome Gold and Champion Iron go up and down completely randomly.
Pair Corralation between Wesdome Gold and Champion Iron
Assuming the 90 days trading horizon Wesdome Gold Mines is expected to generate 1.11 times more return on investment than Champion Iron. However, Wesdome Gold is 1.11 times more volatile than Champion Iron. It trades about 0.22 of its potential returns per unit of risk. Champion Iron is currently generating about 0.19 per unit of risk. If you would invest 1,253 in Wesdome Gold Mines on October 22, 2024 and sell it today you would earn a total of 104.00 from holding Wesdome Gold Mines or generate 8.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wesdome Gold Mines vs. Champion Iron
Performance |
| Timeline |
| Wesdome Gold Mines |
| Champion Iron |
Wesdome Gold and Champion Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wesdome Gold and Champion Iron
The main advantage of trading using opposite Wesdome Gold and Champion Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wesdome Gold position performs unexpectedly, Champion Iron 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 Champion Iron will offset losses from the drop in Champion Iron's long position.| Wesdome Gold vs. OceanaGold | Wesdome Gold vs. Torex Gold Resources | Wesdome Gold vs. Alamos Gold | Wesdome Gold vs. Dundee Precious Metals |
| Champion Iron vs. Black Iron | Champion Iron vs. Wesdome Gold Mines | Champion Iron vs. GoGold Resources | Champion Iron vs. Mason Graphite |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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