Correlation Between Aedas Homes and Gold Road
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and Gold Road 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 Aedas Homes and Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aedas Homes SA and Gold Road Resources, you can compare the effects of market volatilities on Aedas Homes and Gold Road 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 Aedas Homes with a short position of Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and Gold Road.
Diversification Opportunities for Aedas Homes and Gold Road
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aedas and Gold is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources and Aedas Homes 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 Aedas Homes SA are associated (or correlated) with Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Aedas Homes i.e., Aedas Homes and Gold Road go up and down completely randomly.
Pair Corralation between Aedas Homes and Gold Road
Assuming the 90 days horizon Aedas Homes SA is expected to generate 0.76 times more return on investment than Gold Road. However, Aedas Homes SA is 1.31 times less risky than Gold Road. It trades about -0.08 of its potential returns per unit of risk. Gold Road Resources is currently generating about -0.1 per unit of risk. If you would invest 2,575 in Aedas Homes SA on August 25, 2024 and sell it today you would lose (95.00) from holding Aedas Homes SA or give up 3.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aedas Homes SA vs. Gold Road Resources
Performance |
| Timeline |
| Aedas Homes SA |
| Gold Road Resources |
Aedas Homes and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aedas Homes and Gold Road
The main advantage of trading using opposite Aedas Homes and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.| Aedas Homes vs. Lennar | Aedas Homes vs. NVR Inc | Aedas Homes vs. PulteGroup | Aedas Homes vs. Sekisui Chemical Co |
| Gold Road vs. Franco Nevada | Gold Road vs. Agnico Eagle Mines | Gold Road vs. Superior Plus Corp | Gold Road vs. NMI Holdings |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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