Correlation Between Dow Jones and Golden Goliath
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Golden Goliath 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 Dow Jones and Golden Goliath into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Golden Goliath Resources, you can compare the effects of market volatilities on Dow Jones and Golden Goliath 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 Dow Jones with a short position of Golden Goliath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Golden Goliath.
Diversification Opportunities for Dow Jones and Golden Goliath
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Golden is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Golden Goliath Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Goliath Resources and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Golden Goliath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Goliath Resources has no effect on the direction of Dow Jones i.e., Dow Jones and Golden Goliath go up and down completely randomly.
Pair Corralation between Dow Jones and Golden Goliath
Assuming the 90 days trading horizon Dow Jones is expected to generate 17.68 times less return on investment than Golden Goliath. But when comparing it to its historical volatility, Dow Jones Industrial is 30.71 times less risky than Golden Goliath. It trades about 0.29 of its potential returns per unit of risk. Golden Goliath Resources is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 5.39 in Golden Goliath Resources on November 4, 2024 and sell it today you would earn a total of 1.61 from holding Golden Goliath Resources or generate 29.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Golden Goliath Resources
Performance |
| Timeline |
Dow Jones and Golden Goliath Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Golden Goliath Resources
Pair trading matchups for Golden Goliath
Pair Trading with Dow Jones and Golden Goliath
The main advantage of trading using opposite Dow Jones and Golden Goliath positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Golden Goliath 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 Golden Goliath will offset losses from the drop in Golden Goliath's long position.| Dow Jones vs. Rambler Metals and | Dow Jones vs. Nicola Mining | Dow Jones vs. Old Dominion Freight | Dow Jones vs. United Guardian |
| Golden Goliath vs. Silver Spruce Resources | Golden Goliath vs. Portofino Resources | Golden Goliath vs. Freegold Ventures Limited | Golden Goliath vs. Bravada 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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