Correlation Between West African and Kinross Gold
Can any of the company-specific risk be diversified away by investing in both West African and Kinross Gold 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 West African and Kinross Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between West African Resources and Kinross Gold, you can compare the effects of market volatilities on West African and Kinross Gold 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 West African with a short position of Kinross Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of West African and Kinross Gold.
Diversification Opportunities for West African and Kinross Gold
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between West and Kinross is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding West African Resources and Kinross Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinross Gold and West African 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 West African Resources are associated (or correlated) with Kinross Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinross Gold has no effect on the direction of West African i.e., West African and Kinross Gold go up and down completely randomly.
Pair Corralation between West African and Kinross Gold
Assuming the 90 days horizon West African is expected to generate 1.17 times less return on investment than Kinross Gold. But when comparing it to its historical volatility, West African Resources is 1.01 times less risky than Kinross Gold. It trades about 0.22 of its potential returns per unit of risk. Kinross Gold is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 907.00 in Kinross Gold on October 20, 2024 and sell it today you would earn a total of 124.00 from holding Kinross Gold or generate 13.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
West African Resources vs. Kinross Gold
Performance |
| Timeline |
| West African Resources |
| Kinross Gold |
West African and Kinross Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with West African and Kinross Gold
The main advantage of trading using opposite West African and Kinross Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if West African position performs unexpectedly, Kinross Gold 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 Kinross Gold will offset losses from the drop in Kinross Gold's long position.| West African vs. Harmony Gold Mining | West African vs. AngloGold Ashanti plc | West African vs. Gold Fields Ltd | West African vs. Kinross Gold |
| Kinross Gold vs. Pan American Silver | Kinross Gold vs. Newmont Goldcorp Corp | Kinross Gold vs. Wheaton Precious Metals | Kinross Gold vs. Franco Nevada |
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 Stocks Directory module to find actively traded stocks across global markets.
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