Correlation Between Pan American and DRDGOLD Limited
Can any of the company-specific risk be diversified away by investing in both Pan American and DRDGOLD Limited 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 Pan American and DRDGOLD Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pan American Silver and DRDGOLD Limited ADR, you can compare the effects of market volatilities on Pan American and DRDGOLD Limited 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 Pan American with a short position of DRDGOLD Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan American and DRDGOLD Limited.
Diversification Opportunities for Pan American and DRDGOLD Limited
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pan and DRDGOLD is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Pan American Silver and DRDGOLD Limited ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRDGOLD Limited ADR and Pan American 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 Pan American Silver are associated (or correlated) with DRDGOLD Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRDGOLD Limited ADR has no effect on the direction of Pan American i.e., Pan American and DRDGOLD Limited go up and down completely randomly.
Pair Corralation between Pan American and DRDGOLD Limited
Given the investment horizon of 90 days Pan American Silver is expected to generate 0.98 times more return on investment than DRDGOLD Limited. However, Pan American Silver is 1.02 times less risky than DRDGOLD Limited. It trades about 0.06 of its potential returns per unit of risk. DRDGOLD Limited ADR is currently generating about 0.02 per unit of risk. If you would invest 2,576 in Pan American Silver on March 24, 2025 and sell it today you would earn a total of 291.00 from holding Pan American Silver or generate 11.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pan American Silver vs. DRDGOLD Limited ADR
Performance |
| Timeline |
| Pan American Silver |
| DRDGOLD Limited ADR |
Pan American and DRDGOLD Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pan American and DRDGOLD Limited
The main advantage of trading using opposite Pan American and DRDGOLD Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pan American position performs unexpectedly, DRDGOLD Limited 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 DRDGOLD Limited will offset losses from the drop in DRDGOLD Limited's long position.| Pan American vs. Newmont Goldcorp Corp | Pan American vs. Wheaton Precious Metals | Pan American vs. Franco Nevada | Pan American vs. Kinross Gold |
| DRDGOLD Limited vs. Osisko Gold Ro | DRDGOLD Limited vs. Eldorado Gold Corp | DRDGOLD Limited vs. SSR Mining | DRDGOLD Limited vs. Idaho Strategic Resources |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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