Correlation Between Capitol Health and Gold Road
Can any of the company-specific risk be diversified away by investing in both Capitol Health 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 Capitol Health and Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitol Health and Gold Road Resources, you can compare the effects of market volatilities on Capitol Health 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 Capitol Health with a short position of Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Health and Gold Road.
Diversification Opportunities for Capitol Health and Gold Road
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capitol and Gold is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Health 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 Capitol Health 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 Capitol Health 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 Capitol Health i.e., Capitol Health and Gold Road go up and down completely randomly.
Pair Corralation between Capitol Health and Gold Road
Assuming the 90 days trading horizon Capitol Health is expected to generate 1.16 times more return on investment than Gold Road. However, Capitol Health is 1.16 times more volatile than Gold Road Resources. It trades about 0.08 of its potential returns per unit of risk. Gold Road Resources is currently generating about 0.07 per unit of risk. If you would invest 26.00 in Capitol Health on August 25, 2024 and sell it today you would earn a total of 10.00 from holding Capitol Health or generate 38.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capitol Health vs. Gold Road Resources
Performance |
| Timeline |
| Capitol Health |
| Gold Road Resources |
Capitol Health and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitol Health and Gold Road
The main advantage of trading using opposite Capitol Health and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitol Health 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.| Capitol Health vs. Inventis | Capitol Health vs. PM Capital Global | Capitol Health vs. Macquarie Group Ltd | Capitol Health vs. Wam Leaders |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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