Correlation Between K2 Gold and United Parcel
Can any of the company-specific risk be diversified away by investing in both K2 Gold and United Parcel 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 K2 Gold and United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K2 Gold and United Parcel Service, you can compare the effects of market volatilities on K2 Gold and United Parcel 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 K2 Gold with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of K2 Gold and United Parcel.
Diversification Opportunities for K2 Gold and United Parcel
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between KTGDF and United is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding K2 Gold and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service and K2 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 K2 Gold are associated (or correlated) with United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of K2 Gold i.e., K2 Gold and United Parcel go up and down completely randomly.
Pair Corralation between K2 Gold and United Parcel
Assuming the 90 days horizon K2 Gold is expected to generate 4.07 times more return on investment than United Parcel. However, K2 Gold is 4.07 times more volatile than United Parcel Service. It trades about 0.2 of its potential returns per unit of risk. United Parcel Service is currently generating about -0.16 per unit of risk. If you would invest 8.00 in K2 Gold on January 20, 2024 and sell it today you would earn a total of 3.00 from holding K2 Gold or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
K2 Gold vs. United Parcel Service
Performance |
| Timeline |
| K2 Gold |
| United Parcel Service |
K2 Gold and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K2 Gold and United Parcel
The main advantage of trading using opposite K2 Gold and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K2 Gold position performs unexpectedly, United Parcel 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 Parcel will offset losses from the drop in United Parcel's long position.| K2 Gold vs. Alumina Limited | K2 Gold vs. HUMANA INC | K2 Gold vs. Aquagold International | K2 Gold vs. Spring Valley Acquisition |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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