Correlation Between GOLD ROAD and Daimler Truck
Can any of the company-specific risk be diversified away by investing in both GOLD ROAD and Daimler Truck 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 Daimler Truck 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 Daimler Truck Holding, you can compare the effects of market volatilities on GOLD ROAD and Daimler Truck 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 Daimler Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLD ROAD and Daimler Truck.
Diversification Opportunities for GOLD ROAD and Daimler Truck
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GOLD and Daimler is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and Daimler Truck Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daimler Truck Holding 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 Daimler Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daimler Truck Holding has no effect on the direction of GOLD ROAD i.e., GOLD ROAD and Daimler Truck go up and down completely randomly.
Pair Corralation between GOLD ROAD and Daimler Truck
Assuming the 90 days trading horizon GOLD ROAD RES is expected to generate 1.77 times more return on investment than Daimler Truck. However, GOLD ROAD is 1.77 times more volatile than Daimler Truck Holding. It trades about 0.03 of its potential returns per unit of risk. Daimler Truck Holding is currently generating about 0.05 per unit of risk. If you would invest 100.00 in GOLD ROAD RES on September 23, 2024 and sell it today you would earn a total of 21.00 from holding GOLD ROAD RES or generate 21.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOLD ROAD RES vs. Daimler Truck Holding
Performance |
| Timeline |
| GOLD ROAD RES |
| Daimler Truck Holding |
GOLD ROAD and Daimler Truck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOLD ROAD and Daimler Truck
The main advantage of trading using opposite GOLD ROAD and Daimler Truck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLD ROAD position performs unexpectedly, Daimler Truck 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 Daimler Truck will offset losses from the drop in Daimler Truck's long position.The idea behind GOLD ROAD RES and Daimler Truck Holding 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.| Daimler Truck vs. Gold Road Resources | Daimler Truck vs. GOLD ROAD RES | Daimler Truck vs. Fevertree Drinks PLC | Daimler Truck vs. Yuexiu Transport Infrastructure |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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