Correlation Between US Gold and Guskin Gold

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

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

Diversification Opportunities for US Gold and Guskin Gold

-0.8

Correlation Coefficient

US Gold  Guskin Gold

Pay attention - limited upside

The 3 months correlation between USAU and Guskin is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding US Gold Corp and Guskin Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guskin Gold Corp and US 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 US Gold Corp are associated (or correlated) with Guskin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guskin Gold Corp has no effect on the direction of US Gold i.e., US Gold and Guskin Gold go up and down completely randomly.

Pair Corralation between US Gold and Guskin Gold

Given the investment horizon of 90 days US Gold is expected to generate 36.98 times less return on investment than Guskin Gold. But when comparing it to its historical volatility, US Gold Corp is 31.67 times less risky than Guskin Gold. It trades about 0.09 of its potential returns per unit of risk. Guskin Gold Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.37  in Guskin Gold Corp on September 15, 2024 and sell it today you would lose (0.36) from holding Guskin Gold Corp or give up 97.3% of portfolio value over 90 days.

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

US Gold Corp  vs.  Guskin Gold Corp

US Gold Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in US Gold Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, US Gold unveiled solid returns over the last few months and may actually be approaching a breakup point.

Guskin Gold Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guskin Gold Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward indicators, Guskin Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with US Gold and Guskin Gold

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

The idea behind US Gold Corp and Guskin Gold 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.