Correlation Between GoldMining and First Mining

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

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

Diversification Opportunities for GoldMining and First Mining

0.23

Correlation Coefficient

GoldMining  First Mining

Modest diversification

The 3 months correlation between GoldMining and First is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and First Mining Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mining 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 First Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mining Gold has no effect on the direction of GoldMining i.e., GoldMining and First Mining go up and down completely randomly.

Pair Corralation between GoldMining and First Mining

Assuming the 90 days trading horizon GoldMining is expected to under-perform the First Mining. But the stock apears to be less risky and, when comparing its historical volatility, GoldMining is 1.68 times less risky than First Mining. The stock trades about -0.02 of its potential returns per unit of risk. The First Mining Gold is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  13.00  in First Mining Gold on December 1, 2024 and sell it today you would earn a total of  0.00  from holding First Mining Gold or generate 0.0% return on investment over 90 days.

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

GoldMining  vs.  First Mining Gold

GoldMining

Risk-Adjusted Performance

Very Weak

Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, GoldMining is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

First Mining Gold

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Mining Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, First Mining is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GoldMining and First Mining

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

The idea behind GoldMining and First Mining 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.