Correlation Between Westward Gold and G2 Goldfields
Can any of the company-specific risk be diversified away by investing in both Westward Gold and G2 Goldfields 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 Westward Gold and G2 Goldfields into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westward Gold and G2 Goldfields, you can compare the effects of market volatilities on Westward Gold and G2 Goldfields 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 Westward Gold with a short position of G2 Goldfields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westward Gold and G2 Goldfields.
Diversification Opportunities for Westward Gold and G2 Goldfields
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westward and GUYGF is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Westward Gold and G2 Goldfields in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G2 Goldfields and Westward 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 Westward Gold are associated (or correlated) with G2 Goldfields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G2 Goldfields has no effect on the direction of Westward Gold i.e., Westward Gold and G2 Goldfields go up and down completely randomly.
Pair Corralation between Westward Gold and G2 Goldfields
Assuming the 90 days horizon Westward Gold is expected to generate 2.2 times more return on investment than G2 Goldfields. However, Westward Gold is 2.2 times more volatile than G2 Goldfields. It trades about 0.04 of its potential returns per unit of risk. G2 Goldfields is currently generating about 0.03 per unit of risk. If you would invest 5.43 in Westward Gold on August 30, 2024 and sell it today you would lose (0.04) from holding Westward Gold or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westward Gold vs. G2 Goldfields
Performance |
| Timeline |
| Westward Gold |
| G2 Goldfields |
Westward Gold and G2 Goldfields Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westward Gold and G2 Goldfields
The main advantage of trading using opposite Westward Gold and G2 Goldfields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westward Gold position performs unexpectedly, G2 Goldfields 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 G2 Goldfields will offset losses from the drop in G2 Goldfields' long position.| Westward Gold vs. Vertiv Holdings Co | Westward Gold vs. Nasdaq Inc | Westward Gold vs. McDonalds | Westward Gold vs. Walmart |
| G2 Goldfields vs. Vertiv Holdings Co | G2 Goldfields vs. Nasdaq Inc | G2 Goldfields vs. McDonalds | G2 Goldfields vs. Walmart |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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