Correlation Between GoldMining and Severn Trent
Can any of the company-specific risk be diversified away by investing in both GoldMining and Severn Trent 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 GoldMining and Severn Trent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Severn Trent PLC, you can compare the effects of market volatilities on GoldMining and Severn Trent 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 GoldMining with a short position of Severn Trent. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Severn Trent.
Diversification Opportunities for GoldMining and Severn Trent
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GoldMining and Severn is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Severn Trent PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Severn Trent PLC and GoldMining 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 GoldMining are associated (or correlated) with Severn Trent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Severn Trent PLC has no effect on the direction of GoldMining i.e., GoldMining and Severn Trent go up and down completely randomly.
Pair Corralation between GoldMining and Severn Trent
Assuming the 90 days trading horizon GoldMining is expected to generate 6.76 times more return on investment than Severn Trent. However, GoldMining is 6.76 times more volatile than Severn Trent PLC. It trades about 0.12 of its potential returns per unit of risk. Severn Trent PLC is currently generating about 0.26 per unit of risk. If you would invest 148.00 in GoldMining on September 3, 2025 and sell it today you would earn a total of 53.00 from holding GoldMining or generate 35.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 87.5% |
| Values | Daily Returns |
GoldMining vs. Severn Trent PLC
Performance |
| Timeline |
| GoldMining |
| Severn Trent PLC |
GoldMining and Severn Trent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Severn Trent
The main advantage of trading using opposite GoldMining and Severn Trent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Severn Trent 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 Severn Trent will offset losses from the drop in Severn Trent's long position.| GoldMining vs. Elmos Semiconductor SE | GoldMining vs. Concurrent Technologies Plc | GoldMining vs. Odfjell Drilling | GoldMining vs. Critical Metals Plc |
| Severn Trent vs. Caledonia Investments | Severn Trent vs. Schroders Investment Trusts | Severn Trent vs. Premier Foods PLC | Severn Trent vs. Temple Bar Investment |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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