Correlation Between Wesdome Gold and First Mining
Can any of the company-specific risk be diversified away by investing in both Wesdome Gold and First 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 Wesdome Gold and First Mining 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 First Mining Gold, you can compare the effects of market volatilities on Wesdome Gold and First 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 Wesdome Gold with a short position of First Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesdome Gold and First Mining.
Diversification Opportunities for Wesdome Gold and First Mining
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wesdome and First is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Wesdome Gold Mines and First Mining Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mining Gold 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 First Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mining Gold has no effect on the direction of Wesdome Gold i.e., Wesdome Gold and First Mining go up and down completely randomly.
Pair Corralation between Wesdome Gold and First Mining
Assuming the 90 days horizon Wesdome Gold Mines is expected to generate 0.65 times more return on investment than First Mining. However, Wesdome Gold Mines is 1.53 times less risky than First Mining. It trades about 0.03 of its potential returns per unit of risk. First Mining Gold is currently generating about -0.05 per unit of risk. If you would invest 861.00 in Wesdome Gold Mines on September 3, 2024 and sell it today you would earn a total of 8.00 from holding Wesdome Gold Mines or generate 0.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wesdome Gold Mines vs. First Mining Gold
Performance |
| Timeline |
| Wesdome Gold Mines |
| First Mining Gold |
Wesdome Gold and First Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wesdome Gold and First Mining
The main advantage of trading using opposite Wesdome Gold and First Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wesdome Gold position performs unexpectedly, First 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 First Mining will offset losses from the drop in First Mining's long position.| Wesdome Gold vs. Victoria Gold Corp | Wesdome Gold vs. Cassiar Gold Corp | Wesdome Gold vs. Liberty Gold Corp | Wesdome Gold vs. I 80 Gold Corp |
| First Mining vs. Aurion Resources | First Mining vs. Orezone Gold Corp | First Mining vs. Rio2 Limited | First Mining vs. Norsemont Mining |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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