Correlation Between GoldMining and Seabridge Gold

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

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

Diversification Opportunities for GoldMining and Seabridge Gold

0.68

Correlation Coefficient

GoldMining  Seabridge Gold

Poor diversification

The 3 months correlation between GoldMining and Seabridge is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Seabridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seabridge Gold and GoldMining 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 GoldMining are associated (or correlated) with Seabridge Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seabridge Gold has no effect on the direction of GoldMining i.e., GoldMining and Seabridge Gold go up and down completely randomly.

Pair Corralation between GoldMining and Seabridge Gold

Given the investment horizon of 90 days GoldMining is expected to generate 0.91 times more return on investment than Seabridge Gold. However, GoldMining is 1.1 times less risky than Seabridge Gold. It trades about -0.09 of its potential returns per unit of risk. Seabridge Gold is currently generating about -0.13 per unit of risk. If you would invest  101.00  in GoldMining on September 17, 2024 and sell it today you would lose (16.00) from holding GoldMining or give up 15.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

GoldMining  vs.  Seabridge Gold

GoldMining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Seabridge Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seabridge Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with GoldMining and Seabridge Gold

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

The idea behind GoldMining and Seabridge 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.