Correlation Between Maiden Holdings and US GoldMining

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

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

Diversification Opportunities for Maiden Holdings and US GoldMining

0.45

Correlation Coefficient

Maiden Holdings  US GoldMining

Very weak diversification

The 3 months correlation between Maiden and USGOW is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Maiden Holdings and US GoldMining Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US GoldMining Warrant and Maiden Holdings 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 Maiden Holdings are associated (or correlated) with US GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US GoldMining Warrant has no effect on the direction of Maiden Holdings i.e., Maiden Holdings and US GoldMining go up and down completely randomly.

Pair Corralation between Maiden Holdings and US GoldMining

Given the investment horizon of 90 days Maiden Holdings is expected to generate 19.45 times less return on investment than US GoldMining. But when comparing it to its historical volatility, Maiden Holdings is 10.72 times less risky than US GoldMining. It trades about 0.1 of its potential returns per unit of risk. US GoldMining Warrant is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  70.00  in US GoldMining Warrant on August 31, 2024 and sell it today you would earn a total of  136.00  from holding US GoldMining Warrant or generate 194.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.06%
Values	Daily Returns

Maiden Holdings  vs.  US GoldMining Warrant

Maiden Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maiden Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady essential indicators, Maiden Holdings may actually be approaching a critical reversion point that can send shares even higher in December 2024.

US GoldMining Warrant

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US GoldMining Warrant are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, US GoldMining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maiden Holdings and US GoldMining

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

The idea behind Maiden Holdings and US GoldMining Warrant 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..