Correlation Between United States and Kinross Gold

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

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

Diversification Opportunities for United States and Kinross Gold

-0.78

Correlation Coefficient

United States  Kinross Gold

Pay attention - limited upside

The 3 months correlation between United and Kinross is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Kinross Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinross Gold and United States 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 United States Steel are associated (or correlated) with Kinross Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinross Gold has no effect on the direction of United States i.e., United States and Kinross Gold go up and down completely randomly.

Pair Corralation between United States and Kinross Gold

Taking into account the 90-day investment horizon United States is expected to generate 1.08 times less return on investment than Kinross Gold. In addition to that, United States is 1.42 times more volatile than Kinross Gold. It trades about 0.05 of its total potential returns per unit of risk. Kinross Gold is currently generating about 0.07 per unit of volatility. If you would invest  443.00  in Kinross Gold on January 31, 2024 and sell it today you would earn a total of  241.00  from holding Kinross Gold or generate 54.4% return on investment over 90 days.

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

United States Steel  vs.  Kinross Gold

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Kinross Gold

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinross Gold are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Kinross Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United States and Kinross Gold

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

The idea behind United States Steel and Kinross 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.