Correlation Between KAUFMAN ET and GOLD ROAD
Can any of the company-specific risk be diversified away by investing in both KAUFMAN ET 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 KAUFMAN ET and GOLD ROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAUFMAN ET BROAD and GOLD ROAD RES, you can compare the effects of market volatilities on KAUFMAN ET 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 KAUFMAN ET with a short position of GOLD ROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and GOLD ROAD.
Diversification Opportunities for KAUFMAN ET and GOLD ROAD
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KAUFMAN and GOLD is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD and GOLD ROAD RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLD ROAD RES and KAUFMAN ET 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 KAUFMAN ET BROAD 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 RES has no effect on the direction of KAUFMAN ET i.e., KAUFMAN ET and GOLD ROAD go up and down completely randomly.
Pair Corralation between KAUFMAN ET and GOLD ROAD
Assuming the 90 days trading horizon KAUFMAN ET BROAD is expected to generate 0.69 times more return on investment than GOLD ROAD. However, KAUFMAN ET BROAD is 1.46 times less risky than GOLD ROAD. It trades about 0.04 of its potential returns per unit of risk. GOLD ROAD RES is currently generating about 0.02 per unit of risk. If you would invest 2,441 in KAUFMAN ET BROAD on August 31, 2024 and sell it today you would earn a total of 659.00 from holding KAUFMAN ET BROAD or generate 27.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAUFMAN ET BROAD vs. GOLD ROAD RES
Performance |
| Timeline |
| KAUFMAN ET BROAD |
| GOLD ROAD RES |
KAUFMAN ET and GOLD ROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAUFMAN ET and GOLD ROAD
The main advantage of trading using opposite KAUFMAN ET and GOLD ROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAUFMAN ET 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.| KAUFMAN ET vs. Direct Line Insurance | KAUFMAN ET vs. Zijin Mining Group | KAUFMAN ET vs. Lion One Metals | KAUFMAN ET vs. Japan Post Insurance |
| GOLD ROAD vs. Tsingtao Brewery | GOLD ROAD vs. MOLSON RS BEVERAGE | GOLD ROAD vs. COMBA TELECOM SYST | GOLD ROAD vs. SBA Communications Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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