Correlation Between Teradata Corp and Gold Road
Can any of the company-specific risk be diversified away by investing in both Teradata Corp 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 Teradata Corp and Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradata Corp and Gold Road Resources, you can compare the effects of market volatilities on Teradata Corp 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 Teradata Corp with a short position of Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradata Corp and Gold Road.
Diversification Opportunities for Teradata Corp and Gold Road
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Teradata and Gold is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Teradata Corp 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 Teradata Corp 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 Teradata Corp 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 Teradata Corp i.e., Teradata Corp and Gold Road go up and down completely randomly.
Pair Corralation between Teradata Corp and Gold Road
Assuming the 90 days horizon Teradata Corp is expected to generate 4.26 times less return on investment than Gold Road. But when comparing it to its historical volatility, Teradata Corp is 1.47 times less risky than Gold Road. It trades about 0.1 of its potential returns per unit of risk. Gold Road Resources is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 118.00 in Gold Road Resources on October 30, 2024 and sell it today you would earn a total of 27.00 from holding Gold Road Resources or generate 22.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradata Corp vs. Gold Road Resources
Performance |
| Timeline |
| Teradata Corp |
| Gold Road Resources |
Teradata Corp and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradata Corp and Gold Road
The main advantage of trading using opposite Teradata Corp and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradata Corp 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.| Teradata Corp vs. InPlay Oil Corp | Teradata Corp vs. BOS BETTER ONLINE | Teradata Corp vs. Gaming and Leisure | Teradata Corp vs. ARISTOCRAT LEISURE |
| Gold Road vs. CN DATANG C | Gold Road vs. Dairy Farm International | Gold Road vs. INFORMATION SVC GRP | Gold Road vs. NTT DATA |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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