Correlation Between ArcelorMittal and Gold Road
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal 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 ArcelorMittal and Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ArcelorMittal SA and Gold Road Resources, you can compare the effects of market volatilities on ArcelorMittal 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 ArcelorMittal with a short position of Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Gold Road.
Diversification Opportunities for ArcelorMittal and Gold Road
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ArcelorMittal and Gold is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal 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 ArcelorMittal 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 ArcelorMittal 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 ArcelorMittal i.e., ArcelorMittal and Gold Road go up and down completely randomly.
Pair Corralation between ArcelorMittal and Gold Road
Assuming the 90 days trading horizon ArcelorMittal SA is expected to generate 0.88 times more return on investment than Gold Road. However, ArcelorMittal SA is 1.13 times less risky than Gold Road. It trades about 0.12 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 2,253 in ArcelorMittal SA on September 5, 2024 and sell it today you would earn a total of 138.00 from holding ArcelorMittal SA or generate 6.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ArcelorMittal SA vs. Gold Road Resources
Performance |
| Timeline |
| ArcelorMittal SA |
| Gold Road Resources |
ArcelorMittal and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Gold Road
The main advantage of trading using opposite ArcelorMittal and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal 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.| ArcelorMittal vs. Gold Road Resources | ArcelorMittal vs. Lamar Advertising | ArcelorMittal vs. COPLAND ROAD CAPITAL | ArcelorMittal vs. Liberty Broadband |
| Gold Road vs. Superior Plus Corp | Gold Road vs. NMI Holdings | Gold Road vs. Origin Agritech | Gold Road vs. SIVERS SEMICONDUCTORS AB |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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