Correlation Between Global Opportunities and GoldMining

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

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

Diversification Opportunities for Global Opportunities and GoldMining

-0.32

Correlation Coefficient

Global Opportunities  GoldMining

Very good diversification

The 3 months correlation between Global and GoldMining is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Global Opportunities Trust and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and Global Opportunities 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 Global Opportunities Trust are associated (or correlated) with GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Global Opportunities i.e., Global Opportunities and GoldMining go up and down completely randomly.

Pair Corralation between Global Opportunities and GoldMining

Assuming the 90 days trading horizon Global Opportunities is expected to generate 2.08 times less return on investment than GoldMining. But when comparing it to its historical volatility, Global Opportunities Trust is 2.02 times less risky than GoldMining. It trades about 0.08 of its potential returns per unit of risk. GoldMining is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  111.00  in GoldMining on December 26, 2024 and sell it today you would earn a total of  8.00  from holding GoldMining or generate 7.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.08%
Values	Daily Returns

Global Opportunities Trust  vs.  GoldMining

Global Opportunities

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Opportunities Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Global Opportunities is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

GoldMining

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GoldMining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GoldMining may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Global Opportunities and GoldMining

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

The idea behind Global Opportunities Trust and GoldMining 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.