Correlation Between Gold Terra and Southern Empire
Can any of the company-specific risk be diversified away by investing in both Gold Terra and Southern Empire 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 Gold Terra and Southern Empire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Terra Resource and Southern Empire Resources, you can compare the effects of market volatilities on Gold Terra and Southern Empire 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 Gold Terra with a short position of Southern Empire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Terra and Southern Empire.
Diversification Opportunities for Gold Terra and Southern Empire
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gold and Southern is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gold Terra Resource and Southern Empire Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Empire Resources and Gold Terra 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 Gold Terra Resource are associated (or correlated) with Southern Empire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Empire Resources has no effect on the direction of Gold Terra i.e., Gold Terra and Southern Empire go up and down completely randomly.
Pair Corralation between Gold Terra and Southern Empire
Assuming the 90 days horizon Gold Terra Resource is expected to generate 1.33 times more return on investment than Southern Empire. However, Gold Terra is 1.33 times more volatile than Southern Empire Resources. It trades about 0.04 of its potential returns per unit of risk. Southern Empire Resources is currently generating about -0.38 per unit of risk. If you would invest 6.00 in Gold Terra Resource on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Gold Terra Resource or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Terra Resource vs. Southern Empire Resources
Performance |
| Timeline |
| Gold Terra Resource |
| Southern Empire Resources |
Gold Terra and Southern Empire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Terra and Southern Empire
The main advantage of trading using opposite Gold Terra and Southern Empire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Terra position performs unexpectedly, Southern Empire 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 Southern Empire will offset losses from the drop in Southern Empire's long position.| Gold Terra vs. GR Silver Mining | Gold Terra vs. Maple Gold Mines | Gold Terra vs. Revival Gold | Gold Terra vs. White Gold Corp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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