Correlation Between Adidas AG and GoldMining
Can any of the company-specific risk be diversified away by investing in both Adidas AG and GoldMining 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 Adidas AG and GoldMining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adidas AG and GoldMining, you can compare the effects of market volatilities on Adidas AG and GoldMining 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 Adidas AG with a short position of GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adidas AG and GoldMining.
Diversification Opportunities for Adidas AG and GoldMining
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Adidas and GoldMining is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Adidas AG and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and Adidas AG 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 Adidas AG are associated (or correlated) with GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Adidas AG i.e., Adidas AG and GoldMining go up and down completely randomly.
Pair Corralation between Adidas AG and GoldMining
Assuming the 90 days trading horizon Adidas AG is expected to under-perform the GoldMining. But the stock apears to be less risky and, when comparing its historical volatility, Adidas AG is 1.58 times less risky than GoldMining. The stock trades about -0.02 of its potential returns per unit of risk. The GoldMining is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 119.00 in GoldMining on September 2, 2024 and sell it today you would earn a total of 1.00 from holding GoldMining or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 68.18% |
| Values | Daily Returns |
Adidas AG vs. GoldMining
Performance |
| Timeline |
| Adidas AG |
| GoldMining |
Adidas AG and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adidas AG and GoldMining
The main advantage of trading using opposite Adidas AG and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adidas AG position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| Adidas AG vs. Uniper SE | Adidas AG vs. Mulberry Group PLC | Adidas AG vs. London Security Plc | Adidas AG vs. Triad Group PLC |
| GoldMining vs. European Metals Holdings | GoldMining vs. Cornish Metals | GoldMining vs. Virgin Wines UK | GoldMining vs. Gaztransport et Technigaz |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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