Correlation Between Kinross Gold and Canadian Natural

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

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

Diversification Opportunities for Kinross Gold and Canadian Natural

-0.31

Correlation Coefficient

Kinross Gold  Canadian Natural

Very good diversification

The 3 months correlation between Kinross and Canadian is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Kinross Gold Corp and Canadian Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Natural Res and Kinross 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 Kinross Gold Corp are associated (or correlated) with Canadian Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Natural Res has no effect on the direction of Kinross Gold i.e., Kinross Gold and Canadian Natural go up and down completely randomly.

Pair Corralation between Kinross Gold and Canadian Natural

Given the investment horizon of 90 days Kinross Gold Corp is expected to generate 1.73 times more return on investment than Canadian Natural. However, Kinross Gold is 1.73 times more volatile than Canadian Natural Resources. It trades about 0.08 of its potential returns per unit of risk. Canadian Natural Resources is currently generating about -0.14 per unit of risk. If you would invest  1,371  in Kinross Gold Corp on November 29, 2024 and sell it today you would earn a total of  161.00  from holding Kinross Gold Corp or generate 11.74% return on investment over 90 days.

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

Kinross Gold Corp  vs.  Canadian Natural Resources

Kinross Gold Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinross Gold Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Kinross Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Canadian Natural Res

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canadian Natural Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Kinross Gold and Canadian Natural

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

The idea behind Kinross Gold Corp and Canadian Natural Resources 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.