Correlation Between Wesdome Gold and GoldMining
Can any of the company-specific risk be diversified away by investing in both Wesdome Gold and GoldMining 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 GoldMining 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 GoldMining, you can compare the effects of market volatilities on Wesdome Gold and GoldMining 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 GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesdome Gold and GoldMining.
Diversification Opportunities for Wesdome Gold and GoldMining
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wesdome and GoldMining is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Wesdome Gold Mines and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Wesdome Gold i.e., Wesdome Gold and GoldMining go up and down completely randomly.
Pair Corralation between Wesdome Gold and GoldMining
Assuming the 90 days trading horizon Wesdome Gold Mines is expected to generate 1.17 times more return on investment than GoldMining. However, Wesdome Gold is 1.17 times more volatile than GoldMining. It trades about 0.2 of its potential returns per unit of risk. GoldMining is currently generating about 0.13 per unit of risk. If you would invest 1,253 in Wesdome Gold Mines on October 23, 2024 and sell it today you would earn a total of 94.00 from holding Wesdome Gold Mines or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Wesdome Gold Mines vs. GoldMining
Performance |
| Timeline |
| Wesdome Gold Mines |
| GoldMining |
Wesdome Gold and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wesdome Gold and GoldMining
The main advantage of trading using opposite Wesdome Gold and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wesdome Gold position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| Wesdome Gold vs. OceanaGold | Wesdome Gold vs. Torex Gold Resources | Wesdome Gold vs. Alamos Gold | Wesdome Gold vs. Dundee Precious Metals |
| GoldMining vs. Lion One Metals | GoldMining vs. New Found Gold | GoldMining vs. Eskay Mining Corp | GoldMining vs. Labrador 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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