Correlation Between Dakota Gold and United States

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

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

Diversification Opportunities for Dakota Gold and United States

0.16

Correlation Coefficient

Dakota Gold  United States

Average diversification

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

Pair Corralation between Dakota Gold and United States

Allowing for the 90-day total investment horizon Dakota Gold is expected to generate 14.44 times less return on investment than United States. In addition to that, Dakota Gold is 1.12 times more volatile than United States Steel. It trades about 0.01 of its total potential returns per unit of risk. United States Steel is currently generating about 0.2 per unit of volatility. If you would invest  2,935  in United States Steel on September 4, 2024 and sell it today you would earn a total of  1,160  from holding United States Steel or generate 39.52% return on investment over 90 days.

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

Dakota Gold Corp  vs.  United States Steel

Dakota Gold Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Dakota Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Dakota Gold is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

United States Steel

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United States Steel are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, United States showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dakota Gold and United States

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

The idea behind Dakota Gold Corp and United States Steel 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.