Correlation Between New World and Angus Gold

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

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

Diversification Opportunities for New World and Angus Gold

0.29

Correlation Coefficient

New World  Angus Gold

Modest diversification

The 3 months correlation between New and Angus is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding New World Gold and Angus Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angus Gold and New World 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 World Gold are associated (or correlated) with Angus Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angus Gold has no effect on the direction of New World i.e., New World and Angus Gold go up and down completely randomly.

Pair Corralation between New World and Angus Gold

Given the investment horizon of 90 days New World Gold is expected to generate 1.4 times more return on investment than Angus Gold. However, New World is 1.4 times more volatile than Angus Gold. It trades about 0.06 of its potential returns per unit of risk. Angus Gold is currently generating about 0.04 per unit of risk. If you would invest  0.01  in New World Gold on December 27, 2024 and sell it today you would earn a total of  0.00  from holding New World Gold or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

New World Gold  vs.  Angus Gold

New World Gold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in New World Gold are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, New World exhibited solid returns over the last few months and may actually be approaching a breakup point.

Angus Gold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Angus Gold are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Angus Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with New World and Angus Gold

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

The idea behind New World Gold and Angus 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 Correlations module to find global opportunities by holding instruments from different markets.