Correlation Between BC IRON and Gold Road
Can any of the company-specific risk be diversified away by investing in both BC IRON 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 BC IRON and Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BC IRON and Gold Road Resources, you can compare the effects of market volatilities on BC IRON 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 BC IRON with a short position of Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of BC IRON and Gold Road.
Diversification Opportunities for BC IRON and Gold Road
Very good diversification
The 3 months correlation between BC3 and Gold is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding BC IRON 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 BC IRON 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 BC IRON 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 BC IRON i.e., BC IRON and Gold Road go up and down completely randomly.
Pair Corralation between BC IRON and Gold Road
Assuming the 90 days trading horizon BC IRON is expected to generate 3.41 times less return on investment than Gold Road. In addition to that, BC IRON is 1.26 times more volatile than Gold Road Resources. It trades about 0.01 of its total potential returns per unit of risk. Gold Road Resources is currently generating about 0.05 per unit of volatility. If you would invest 94.00 in Gold Road Resources on October 27, 2024 and sell it today you would earn a total of 54.00 from holding Gold Road Resources or generate 57.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BC IRON vs. Gold Road Resources
Performance |
| Timeline |
| BC IRON |
| Gold Road Resources |
BC IRON and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BC IRON and Gold Road
The main advantage of trading using opposite BC IRON and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BC IRON 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.| BC IRON vs. CDN IMPERIAL BANK | BC IRON vs. Synovus Financial Corp | BC IRON vs. Erste Group Bank | BC IRON vs. Chiba Bank |
| Gold Road vs. Gaztransport Technigaz SA | Gold Road vs. Fevertree Drinks PLC | Gold Road vs. Thai Beverage Public | Gold Road vs. Broadridge Financial Solutions |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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