Correlation Between Pan American and VanEck Gold
Can any of the company-specific risk be diversified away by investing in both Pan American and VanEck 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 Pan American and VanEck Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pan American Silver and VanEck Gold Miners, you can compare the effects of market volatilities on Pan American and VanEck 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 Pan American with a short position of VanEck Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan American and VanEck Gold.
Diversification Opportunities for Pan American and VanEck Gold
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pan and VanEck is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pan American Silver and VanEck Gold Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Gold Miners and Pan American 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 Pan American Silver are associated (or correlated) with VanEck Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Gold Miners has no effect on the direction of Pan American i.e., Pan American and VanEck Gold go up and down completely randomly.
Pair Corralation between Pan American and VanEck Gold
Given the investment horizon of 90 days Pan American is expected to generate 1.1 times less return on investment than VanEck Gold. In addition to that, Pan American is 1.51 times more volatile than VanEck Gold Miners. It trades about 0.16 of its total potential returns per unit of risk. VanEck Gold Miners is currently generating about 0.26 per unit of volatility. If you would invest 3,426 in VanEck Gold Miners on December 27, 2024 and sell it today you would earn a total of 1,041 from holding VanEck Gold Miners or generate 30.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Pan American Silver vs. VanEck Gold Miners
Performance |
Timeline |
Pan American Silver |
VanEck Gold Miners |
Pan American and VanEck Gold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pan American and VanEck Gold
The main advantage of trading using opposite Pan American and VanEck Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pan American position performs unexpectedly, VanEck 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 VanEck Gold will offset losses from the drop in VanEck Gold's long position.Pan American vs. Newmont Goldcorp Corp | Pan American vs. Wheaton Precious Metals | Pan American vs. Franco Nevada | Pan American vs. Kinross Gold |
VanEck Gold vs. VanEck Junior Gold | VanEck Gold vs. iShares Silver Trust | VanEck Gold vs. SPDR Gold Shares | VanEck Gold vs. Newmont Goldcorp Corp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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