Correlation Between GOLD ROAD and St James’s
Can any of the company-specific risk be diversified away by investing in both GOLD ROAD and St James’s 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 GOLD ROAD and St James’s into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOLD ROAD RES and St Jamess Place, you can compare the effects of market volatilities on GOLD ROAD and St James’s 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 GOLD ROAD with a short position of St James’s. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLD ROAD and St James’s.
Diversification Opportunities for GOLD ROAD and St James’s
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GOLD and 1IV is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and St Jamess Place in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St Jamess Place and GOLD ROAD 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 GOLD ROAD RES are associated (or correlated) with St James’s. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St Jamess Place has no effect on the direction of GOLD ROAD i.e., GOLD ROAD and St James’s go up and down completely randomly.
Pair Corralation between GOLD ROAD and St James’s
Assuming the 90 days trading horizon GOLD ROAD RES is expected to generate 2.04 times more return on investment than St James’s. However, GOLD ROAD is 2.04 times more volatile than St Jamess Place. It trades about 0.32 of its potential returns per unit of risk. St Jamess Place is currently generating about 0.3 per unit of risk. If you would invest 106.00 in GOLD ROAD RES on September 14, 2024 and sell it today you would earn a total of 24.00 from holding GOLD ROAD RES or generate 22.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOLD ROAD RES vs. St Jamess Place
Performance |
| Timeline |
| GOLD ROAD RES |
| St Jamess Place |
GOLD ROAD and St James’s Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOLD ROAD and St James’s
The main advantage of trading using opposite GOLD ROAD and St James’s positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLD ROAD position performs unexpectedly, St James’s 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 St James’s will offset losses from the drop in St James’s' long position.The idea behind GOLD ROAD RES and St Jamess Place pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| St James’s vs. Cogent Communications Holdings | St James’s vs. Mobilezone Holding AG | St James’s vs. Digilife Technologies Limited | St James’s vs. ACCSYS TECHPLC EO |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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