Correlation Between Celanese and Gold Resource
Can any of the company-specific risk be diversified away by investing in both Celanese and Gold Resource 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 Celanese and Gold Resource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celanese and Gold Resource, you can compare the effects of market volatilities on Celanese and Gold Resource 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 Celanese with a short position of Gold Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celanese and Gold Resource.
Diversification Opportunities for Celanese and Gold Resource
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Celanese and Gold is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Celanese and Gold Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Resource and Celanese 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 Celanese are associated (or correlated) with Gold Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Resource has no effect on the direction of Celanese i.e., Celanese and Gold Resource go up and down completely randomly.
Pair Corralation between Celanese and Gold Resource
Allowing for the 90-day total investment horizon Celanese is expected to under-perform the Gold Resource. But the stock apears to be less risky and, when comparing its historical volatility, Celanese is 2.62 times less risky than Gold Resource. The stock trades about -0.16 of its potential returns per unit of risk. The Gold Resource is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 50.00 in Gold Resource on September 1, 2024 and sell it today you would lose (33.00) from holding Gold Resource or give up 66.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Celanese vs. Gold Resource
Performance |
| Timeline |
| Celanese |
| Gold Resource |
Celanese and Gold Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Celanese and Gold Resource
The main advantage of trading using opposite Celanese and Gold Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celanese position performs unexpectedly, Gold Resource 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 Resource will offset losses from the drop in Gold Resource's long position.| Celanese vs. Tronox Holdings PLC | Celanese vs. Green Plains Renewable | Celanese vs. Lsb Industries | Celanese vs. Valhi Inc |
| Gold Resource vs. IAMGold | Gold Resource vs. Eldorado Gold Corp | Gold Resource vs. Coeur Mining | Gold Resource vs. Alamos Gold |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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