Correlation Between TRAINLINE PLC and Gold Road
Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC 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 TRAINLINE PLC and Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAINLINE PLC LS and Gold Road Resources, you can compare the effects of market volatilities on TRAINLINE PLC 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 TRAINLINE PLC with a short position of Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and Gold Road.
Diversification Opportunities for TRAINLINE PLC and Gold Road
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TRAINLINE and Gold is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS 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 TRAINLINE PLC 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 TRAINLINE PLC LS 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 TRAINLINE PLC i.e., TRAINLINE PLC and Gold Road go up and down completely randomly.
Pair Corralation between TRAINLINE PLC and Gold Road
Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to under-perform the Gold Road. In addition to that, TRAINLINE PLC is 1.91 times more volatile than Gold Road Resources. It trades about -0.21 of its total potential returns per unit of risk. Gold Road Resources is currently generating about 0.49 per unit of volatility. If you would invest 122.00 in Gold Road Resources on November 3, 2024 and sell it today you would earn a total of 26.00 from holding Gold Road Resources or generate 21.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRAINLINE PLC LS vs. Gold Road Resources
Performance |
| Timeline |
| TRAINLINE PLC LS |
| Gold Road Resources |
TRAINLINE PLC and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRAINLINE PLC and Gold Road
The main advantage of trading using opposite TRAINLINE PLC and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC 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.| TRAINLINE PLC vs. Tokyu Construction Co | TRAINLINE PLC vs. QBE Insurance Group | TRAINLINE PLC vs. Zurich Insurance Group | TRAINLINE PLC vs. Daito Trust Construction |
| Gold Road vs. Richardson Electronics | Gold Road vs. COLUMBIA SPORTSWEAR | Gold Road vs. Delta Electronics Public | Gold Road vs. STORE ELECTRONIC |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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