Correlation Between Monument Mining and Gold Road
Can any of the company-specific risk be diversified away by investing in both Monument Mining 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 Monument Mining and Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monument Mining Limited and Gold Road Resources, you can compare the effects of market volatilities on Monument Mining 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 Monument Mining with a short position of Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monument Mining and Gold Road.
Diversification Opportunities for Monument Mining and Gold Road
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Monument and Gold is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Monument Mining 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 Monument Mining 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 Monument Mining 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 Monument Mining i.e., Monument Mining and Gold Road go up and down completely randomly.
Pair Corralation between Monument Mining and Gold Road
Assuming the 90 days trading horizon Monument Mining Limited is expected to generate 2.2 times more return on investment than Gold Road. However, Monument Mining is 2.2 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 0.05 per unit of risk. If you would invest 8.35 in Monument Mining Limited on October 16, 2024 and sell it today you would earn a total of 14.65 from holding Monument Mining Limited or generate 175.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monument Mining Limited vs. Gold Road Resources
Performance |
| Timeline |
| Monument Mining |
| Gold Road Resources |
Monument Mining and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monument Mining and Gold Road
The main advantage of trading using opposite Monument Mining and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monument Mining 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.| Monument Mining vs. SOFI TECHNOLOGIES | Monument Mining vs. Agilent Technologies | Monument Mining vs. InterContinental Hotels Group | Monument Mining vs. Meli Hotels International |
| Gold Road vs. Pure Storage | Gold Road vs. Monument Mining Limited | Gold Road vs. Linedata Services SA | Gold Road vs. Teradata Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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