Correlation Between BHP Group and Gold Road
Can any of the company-specific risk be diversified away by investing in both BHP Group 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 BHP Group and Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHP Group Limited and Gold Road Resources, you can compare the effects of market volatilities on BHP Group 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 BHP Group with a short position of Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Gold Road.
Diversification Opportunities for BHP Group and Gold Road
Very good diversification
The 3 months correlation between BHP and Gold is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group 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 BHP Group 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 BHP Group 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 BHP Group i.e., BHP Group and Gold Road go up and down completely randomly.
Pair Corralation between BHP Group and Gold Road
Assuming the 90 days horizon BHP Group is expected to generate 171.26 times less return on investment than Gold Road. In addition to that, BHP Group is 1.32 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 1.36 per unit of volatility. If you would invest 119.00 in Gold Road Resources on October 25, 2024 and sell it today you would earn a total of 30.00 from holding Gold Road Resources or generate 25.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Gold Road Resources
Performance |
| Timeline |
| BHP Group Limited |
| Gold Road Resources |
BHP Group and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Gold Road
The main advantage of trading using opposite BHP Group and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group 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.| BHP Group vs. PKSHA TECHNOLOGY INC | BHP Group vs. FAST RETAIL ADR | BHP Group vs. Easy Software AG | BHP Group vs. DXC Technology Co |
| Gold Road vs. De Grey Mining | Gold Road vs. Zijin Mining Group | Gold Road vs. SERI INDUSTRIAL EO | Gold Road vs. ANGLO ASIAN MINING |
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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