Correlation Between Wescan Goldfields and Stelmine Canada

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

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

Diversification Opportunities for Wescan Goldfields and Stelmine Canada

0.11

Correlation Coefficient

Wescan Goldfields  Stelmine Canada

Average diversification

The 3 months correlation between Wescan and Stelmine is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Wescan Goldfields and Stelmine Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelmine Canada and Wescan Goldfields 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 Wescan Goldfields are associated (or correlated) with Stelmine Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelmine Canada has no effect on the direction of Wescan Goldfields i.e., Wescan Goldfields and Stelmine Canada go up and down completely randomly.

Pair Corralation between Wescan Goldfields and Stelmine Canada

Assuming the 90 days horizon Wescan Goldfields is expected to generate 3.05 times less return on investment than Stelmine Canada. But when comparing it to its historical volatility, Wescan Goldfields is 1.01 times less risky than Stelmine Canada. It trades about 0.02 of its potential returns per unit of risk. Stelmine Canada is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Stelmine Canada on October 22, 2024 and sell it today you would earn a total of  0.00  from holding Stelmine Canada or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Wescan Goldfields  vs.  Stelmine Canada

Wescan Goldfields

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wescan Goldfields are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Wescan Goldfields showed solid returns over the last few months and may actually be approaching a breakup point.

Stelmine Canada

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stelmine Canada are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Stelmine Canada showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wescan Goldfields and Stelmine Canada

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

The idea behind Wescan Goldfields and Stelmine Canada 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.