Correlation Between GOLD ROAD and United Breweries
Can any of the company-specific risk be diversified away by investing in both GOLD ROAD and United Breweries 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 United Breweries 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 United Breweries Co, you can compare the effects of market volatilities on GOLD ROAD and United Breweries 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 United Breweries. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLD ROAD and United Breweries.
Diversification Opportunities for GOLD ROAD and United Breweries
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GOLD and United is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and United Breweries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Breweries 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 United Breweries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Breweries has no effect on the direction of GOLD ROAD i.e., GOLD ROAD and United Breweries go up and down completely randomly.
Pair Corralation between GOLD ROAD and United Breweries
Assuming the 90 days trading horizon GOLD ROAD RES is expected to generate 1.62 times more return on investment than United Breweries. However, GOLD ROAD is 1.62 times more volatile than United Breweries Co. It trades about 0.3 of its potential returns per unit of risk. United Breweries Co is currently generating about 0.09 per unit of risk. If you would invest 113.00 in GOLD ROAD RES on October 30, 2024 and sell it today you would earn a total of 34.00 from holding GOLD ROAD RES or generate 30.09% 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. United Breweries Co
Performance |
| Timeline |
| GOLD ROAD RES |
| United Breweries |
GOLD ROAD and United Breweries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOLD ROAD and United Breweries
The main advantage of trading using opposite GOLD ROAD and United Breweries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLD ROAD position performs unexpectedly, United Breweries 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 United Breweries will offset losses from the drop in United Breweries' long position.| GOLD ROAD vs. Sims Metal Management | GOLD ROAD vs. Q2M Managementberatung AG | GOLD ROAD vs. DeVry Education Group | GOLD ROAD vs. CLOVER HEALTH INV |
| United Breweries vs. BORR DRILLING NEW | United Breweries vs. Fortescue Metals Group | United Breweries vs. ADRIATIC METALS LS 013355 | United Breweries vs. Air Transport Services |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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