Correlation Between New Gold and Aris Mining
Can any of the company-specific risk be diversified away by investing in both New Gold and Aris 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 New Gold and Aris Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Gold and Aris Mining, you can compare the effects of market volatilities on New Gold and Aris 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 New Gold with a short position of Aris Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Gold and Aris Mining.
Diversification Opportunities for New Gold and Aris Mining
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Aris is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding New Gold and Aris Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Mining and New 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 New Gold are associated (or correlated) with Aris Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Mining has no effect on the direction of New Gold i.e., New Gold and Aris Mining go up and down completely randomly.
Pair Corralation between New Gold and Aris Mining
Considering the 90-day investment horizon New Gold is expected to generate 1.1 times more return on investment than Aris Mining. However, New Gold is 1.1 times more volatile than Aris Mining. It trades about 0.07 of its potential returns per unit of risk. Aris Mining is currently generating about 0.03 per unit of risk. If you would invest 167.00 in New Gold on December 4, 2024 and sell it today you would earn a total of 100.00 from holding New Gold or generate 59.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
New Gold vs. Aris Mining
Performance |
Timeline |
New Gold |
Aris Mining |
New Gold and Aris Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New Gold and Aris Mining
The main advantage of trading using opposite New Gold and Aris Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Gold position performs unexpectedly, Aris 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 Aris Mining will offset losses from the drop in Aris Mining's long position.New Gold vs. Eldorado Gold Corp | New Gold vs. Kinross Gold | New Gold vs. Harmony Gold Mining | New Gold vs. Coeur Mining |
Aris Mining vs. Zijin Mining Group | Aris Mining vs. Chester Mining | Aris Mining vs. Axalta Coating Systems | Aris Mining vs. Luxfer Holdings PLC |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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