Correlation Between Wesdome Gold and Maple Gold

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

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

Diversification Opportunities for Wesdome Gold and Maple Gold

0.76

Correlation Coefficient

Wesdome Gold  Maple Gold

Poor diversification

The 3 months correlation between Wesdome and Maple is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Wesdome Gold Mines and Maple Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Gold Mines and Wesdome 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 Wesdome Gold Mines are associated (or correlated) with Maple Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Gold Mines has no effect on the direction of Wesdome Gold i.e., Wesdome Gold and Maple Gold go up and down completely randomly.

Pair Corralation between Wesdome Gold and Maple Gold

Assuming the 90 days horizon Wesdome Gold Mines is expected to generate 0.39 times more return on investment than Maple Gold. However, Wesdome Gold Mines is 2.57 times less risky than Maple Gold. It trades about 0.12 of its potential returns per unit of risk. Maple Gold Mines is currently generating about 0.03 per unit of risk. If you would invest  869.00  in Wesdome Gold Mines on November 29, 2024 and sell it today you would earn a total of  141.00  from holding Wesdome Gold Mines or generate 16.23% return on investment over 90 days.

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

Wesdome Gold Mines  vs.  Maple Gold Mines

Wesdome Gold Mines

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wesdome Gold Mines are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Wesdome Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Maple Gold Mines

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Maple Gold Mines are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Maple Gold may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Wesdome Gold and Maple Gold

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

The idea behind Wesdome Gold Mines and Maple Gold Mines 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.