Correlation Between Wesdome Gold and Seabridge Gold

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

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

Diversification Opportunities for Wesdome Gold and Seabridge Gold

0.9

Correlation Coefficient

Wesdome Gold  Seabridge Gold

Almost no diversification

The 3 months correlation between Wesdome and Seabridge is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Wesdome Gold Mines and Seabridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seabridge Gold and Wesdome 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 Wesdome Gold Mines are associated (or correlated) with Seabridge Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seabridge Gold has no effect on the direction of Wesdome Gold i.e., Wesdome Gold and Seabridge Gold go up and down completely randomly.

Pair Corralation between Wesdome Gold and Seabridge Gold

Assuming the 90 days horizon Wesdome Gold Mines is expected to generate 1.28 times more return on investment than Seabridge Gold. However, Wesdome Gold is 1.28 times more volatile than Seabridge Gold. It trades about 0.1 of its potential returns per unit of risk. Seabridge Gold is currently generating about -0.06 per unit of risk. If you would invest  767.00  in Wesdome Gold Mines on February 10, 2024 and sell it today you would earn a total of  50.00  from holding Wesdome Gold Mines or generate 6.52% return on investment over 90 days.

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

Wesdome Gold Mines  vs.  Seabridge Gold

Wesdome Gold Mines

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wesdome Gold Mines are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Wesdome Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Seabridge Gold

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Seabridge Gold are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Seabridge Gold sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wesdome Gold and Seabridge Gold

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

The idea behind Wesdome Gold Mines and Seabridge Gold 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.