Correlation Between Wesdome Gold and GFG Resources
Can any of the company-specific risk be diversified away by investing in both Wesdome Gold and GFG Resources 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 GFG Resources 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 GFG Resources, you can compare the effects of market volatilities on Wesdome Gold and GFG Resources 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 GFG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesdome Gold and GFG Resources.
Diversification Opportunities for Wesdome Gold and GFG Resources
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wesdome and GFG is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Wesdome Gold Mines and GFG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFG Resources 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 GFG Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFG Resources has no effect on the direction of Wesdome Gold i.e., Wesdome Gold and GFG Resources go up and down completely randomly.
Pair Corralation between Wesdome Gold and GFG Resources
Assuming the 90 days horizon Wesdome Gold is expected to generate 1.08 times less return on investment than GFG Resources. But when comparing it to its historical volatility, Wesdome Gold Mines is 1.71 times less risky than GFG Resources. It trades about 0.08 of its potential returns per unit of risk. GFG Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8.44 in GFG Resources on August 25, 2024 and sell it today you would earn a total of 2.56 from holding GFG Resources or generate 30.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wesdome Gold Mines vs. GFG Resources
Performance |
| Timeline |
| Wesdome Gold Mines |
| GFG Resources |
Wesdome Gold and GFG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wesdome Gold and GFG Resources
The main advantage of trading using opposite Wesdome Gold and GFG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wesdome Gold position performs unexpectedly, GFG Resources 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 GFG Resources will offset losses from the drop in GFG Resources' long position.| Wesdome Gold vs. Ascendant Resources | Wesdome Gold vs. Cantex Mine Development | Wesdome Gold vs. Amarc Resources | Wesdome Gold vs. Sterling Metals Corp |
| GFG Resources vs. Japan Gold Corp | GFG Resources vs. Robex Resources | GFG Resources vs. Rover Metals Corp | GFG Resources vs. Orefinders Resources |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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