Correlation Between Dolly Varden and GoldMining

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

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

Diversification Opportunities for Dolly Varden and GoldMining

-0.14

Correlation Coefficient

Dolly Varden  GoldMining

Good diversification

The 3 months correlation between Dolly and GoldMining is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dolly Varden Silver and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and Dolly Varden 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 Dolly Varden Silver are associated (or correlated) with GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Dolly Varden i.e., Dolly Varden and GoldMining go up and down completely randomly.

Pair Corralation between Dolly Varden and GoldMining

Assuming the 90 days trading horizon Dolly Varden Silver is expected to generate 1.54 times more return on investment than GoldMining. However, Dolly Varden is 1.54 times more volatile than GoldMining. It trades about -0.07 of its potential returns per unit of risk. GoldMining is currently generating about -0.11 per unit of risk. If you would invest  109.00  in Dolly Varden Silver on September 24, 2024 and sell it today you would lose (13.00) from holding Dolly Varden Silver or give up 11.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	69.57%
Values	Daily Returns

Dolly Varden Silver  vs.  GoldMining

Dolly Varden Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dolly Varden Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

GoldMining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Dolly Varden and GoldMining

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

The idea behind Dolly Varden Silver and GoldMining 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.