Correlation Between GoldMining and MT Bank

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

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

Diversification Opportunities for GoldMining and MT Bank

0.16

Correlation Coefficient

GoldMining  MT Bank

Average diversification

The 3 months correlation between GoldMining and 0JW2 is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and MT Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank Corp and GoldMining 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 GoldMining are associated (or correlated) with MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank Corp has no effect on the direction of GoldMining i.e., GoldMining and MT Bank go up and down completely randomly.

Pair Corralation between GoldMining and MT Bank

Assuming the 90 days trading horizon GoldMining is expected to under-perform the MT Bank. In addition to that, GoldMining is 1.58 times more volatile than MT Bank Corp. It trades about -0.02 of its total potential returns per unit of risk. MT Bank Corp is currently generating about 0.05 per unit of volatility. If you would invest  17,080  in MT Bank Corp on September 21, 2024 and sell it today you would earn a total of  1,511  from holding MT Bank Corp or generate 8.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	63.81%
Values	Daily Returns

GoldMining  vs.  MT Bank Corp

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.

MT Bank Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MT Bank Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MT Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GoldMining and MT Bank

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

The idea behind GoldMining and MT Bank Corp 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.