Correlation Between Angus Gold and New World

Can any of the company-specific risk be diversified away by investing in both Angus Gold and New World 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 Angus Gold and New World into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Angus Gold and New World Gold, you can compare the effects of market volatilities on Angus Gold and New World 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 Angus Gold with a short position of New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angus Gold and New World.

Diversification Opportunities for Angus Gold and New World

0.29

Correlation Coefficient

Angus Gold  New World

Modest diversification

The 3 months correlation between Angus and New is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Angus Gold and New World Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Gold and Angus 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 Angus Gold are associated (or correlated) with New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Gold has no effect on the direction of Angus Gold i.e., Angus Gold and New World go up and down completely randomly.

Pair Corralation between Angus Gold and New World

Assuming the 90 days horizon Angus Gold is expected to generate 1.95 times less return on investment than New World. But when comparing it to its historical volatility, Angus Gold is 1.4 times less risky than New World. It trades about 0.04 of its potential returns per unit of risk. New World Gold is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.01  in New World Gold on December 27, 2024 and sell it today you would earn a total of  0.00  from holding New World Gold or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Angus Gold  vs.  New World Gold

Angus Gold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Angus Gold are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Angus Gold reported solid returns over the last few months and may actually be approaching a breakup point.

New World Gold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in New World Gold are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, New World exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Angus Gold and New World

The main advantage of trading using opposite Angus Gold and New World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angus Gold position performs unexpectedly, New World 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 New World will offset losses from the drop in New World's long position.

The idea behind Angus Gold and New World Gold pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.