Correlation Between ARN Media and Gold Road
Can any of the company-specific risk be diversified away by investing in both ARN Media 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 ARN Media and Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARN Media Limited and Gold Road Resources, you can compare the effects of market volatilities on ARN Media 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 ARN Media with a short position of Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARN Media and Gold Road.
Diversification Opportunities for ARN Media and Gold Road
Poor diversification
The 3 months correlation between ARN and Gold is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ARN Media Limited 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 ARN Media 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 ARN Media Limited 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 ARN Media i.e., ARN Media and Gold Road go up and down completely randomly.
Pair Corralation between ARN Media and Gold Road
Assuming the 90 days trading horizon ARN Media Limited is expected to generate 1.3 times more return on investment than Gold Road. However, ARN Media is 1.3 times more volatile than Gold Road Resources. It trades about 0.0 of its potential returns per unit of risk. Gold Road Resources is currently generating about -0.04 per unit of risk. If you would invest 72.00 in ARN Media Limited on August 28, 2024 and sell it today you would lose (1.00) from holding ARN Media Limited or give up 1.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARN Media Limited vs. Gold Road Resources
Performance |
| Timeline |
| ARN Media Limited |
| Gold Road Resources |
ARN Media and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARN Media and Gold Road
The main advantage of trading using opposite ARN Media and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARN Media 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.| ARN Media vs. M3 Mining | ARN Media vs. Oneview Healthcare PLC | ARN Media vs. Fisher Paykel Healthcare | ARN Media vs. Lendlease Group |
| Gold Road vs. Northern Star Resources | Gold Road vs. Evolution Mining | Gold Road vs. Bluescope Steel | Gold Road vs. Sandfire Resources NL |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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