Correlation Between United States and Gold Resource
Can any of the company-specific risk be diversified away by investing in both United States and Gold Resource 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 United States and Gold Resource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Gold Resource, you can compare the effects of market volatilities on United States and Gold Resource 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 United States with a short position of Gold Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Gold Resource.
Diversification Opportunities for United States and Gold Resource
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Gold is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Gold Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Resource and United States 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 United States Steel are associated (or correlated) with Gold Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Resource has no effect on the direction of United States i.e., United States and Gold Resource go up and down completely randomly.
Pair Corralation between United States and Gold Resource
Taking into account the 90-day investment horizon United States Steel is expected to generate 0.49 times more return on investment than Gold Resource. However, United States Steel is 2.03 times less risky than Gold Resource. It trades about 0.05 of its potential returns per unit of risk. Gold Resource is currently generating about -0.04 per unit of risk. If you would invest 2,509 in United States Steel on August 30, 2024 and sell it today you would earn a total of 1,536 from holding United States Steel or generate 61.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
United States Steel vs. Gold Resource
Performance |
| Timeline |
| United States Steel |
| Gold Resource |
United States and Gold Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Gold Resource
The main advantage of trading using opposite United States and Gold Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Gold Resource 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 Gold Resource will offset losses from the drop in Gold Resource's long position.| United States vs. Nucor Corp | United States vs. Steel Dynamics | United States vs. ArcelorMittal SA ADR | United States vs. Gerdau SA ADR |
| Gold Resource vs. IAMGold | Gold Resource vs. Eldorado Gold Corp | Gold Resource vs. Coeur Mining | Gold Resource vs. Alamos Gold |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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