Correlation Between Magnum Goldcorp and Arizona Sonoran

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

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

Diversification Opportunities for Magnum Goldcorp and Arizona Sonoran

-0.22

Correlation Coefficient

Magnum Goldcorp  Arizona Sonoran

Very good diversification

The 3 months correlation between Magnum and Arizona is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Magnum Goldcorp and Arizona Sonoran Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arizona Sonoran Copper and Magnum Goldcorp 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 Magnum Goldcorp are associated (or correlated) with Arizona Sonoran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arizona Sonoran Copper has no effect on the direction of Magnum Goldcorp i.e., Magnum Goldcorp and Arizona Sonoran go up and down completely randomly.

Pair Corralation between Magnum Goldcorp and Arizona Sonoran

Assuming the 90 days horizon Magnum Goldcorp is expected to generate 4.83 times more return on investment than Arizona Sonoran. However, Magnum Goldcorp is 4.83 times more volatile than Arizona Sonoran Copper. It trades about 0.06 of its potential returns per unit of risk. Arizona Sonoran Copper is currently generating about 0.02 per unit of risk. If you would invest  14.00  in Magnum Goldcorp on December 4, 2024 and sell it today you would lose (10.50) from holding Magnum Goldcorp or give up 75.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Magnum Goldcorp  vs.  Arizona Sonoran Copper

Magnum Goldcorp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Magnum Goldcorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Magnum Goldcorp showed solid returns over the last few months and may actually be approaching a breakup point.

Arizona Sonoran Copper

Risk-Adjusted Performance

Modest

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

Pair Trading with Magnum Goldcorp and Arizona Sonoran

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

The idea behind Magnum Goldcorp and Arizona Sonoran Copper 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.