Correlation Between GoldMining and Revolution Beauty
Can any of the company-specific risk be diversified away by investing in both GoldMining and Revolution Beauty 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 Revolution Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Revolution Beauty Group, you can compare the effects of market volatilities on GoldMining and Revolution Beauty 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 Revolution Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Revolution Beauty.
Diversification Opportunities for GoldMining and Revolution Beauty
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between GoldMining and Revolution is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Revolution Beauty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revolution Beauty 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 Revolution Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revolution Beauty has no effect on the direction of GoldMining i.e., GoldMining and Revolution Beauty go up and down completely randomly.
Pair Corralation between GoldMining and Revolution Beauty
Assuming the 90 days trading horizon GoldMining is expected to generate 0.79 times more return on investment than Revolution Beauty. However, GoldMining is 1.27 times less risky than Revolution Beauty. It trades about -0.01 of its potential returns per unit of risk. Revolution Beauty Group is currently generating about -0.19 per unit of risk. If you would invest 124.00 in GoldMining on September 4, 2024 and sell it today you would lose (3.00) from holding GoldMining or give up 2.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 69.23% |
| Values | Daily Returns |
GoldMining vs. Revolution Beauty Group
Performance |
| Timeline |
| GoldMining |
| Revolution Beauty |
GoldMining and Revolution Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Revolution Beauty
The main advantage of trading using opposite GoldMining and Revolution Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Revolution Beauty 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 Revolution Beauty will offset losses from the drop in Revolution Beauty's long position.| GoldMining vs. Samsung Electronics Co | GoldMining vs. Samsung Electronics Co | GoldMining vs. Hyundai Motor | GoldMining vs. Toyota Motor Corp |
| Revolution Beauty vs. GoldMining | Revolution Beauty vs. bet at home AG | Revolution Beauty vs. Wheaton Precious Metals | Revolution Beauty vs. Cornish Metals |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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