Correlation Between GOLD ROAD and Performance Food
Can any of the company-specific risk be diversified away by investing in both GOLD ROAD and Performance Food 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 Performance Food 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 Performance Food Group, you can compare the effects of market volatilities on GOLD ROAD and Performance Food 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 Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLD ROAD and Performance Food.
Diversification Opportunities for GOLD ROAD and Performance Food
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GOLD and Performance is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of GOLD ROAD i.e., GOLD ROAD and Performance Food go up and down completely randomly.
Pair Corralation between GOLD ROAD and Performance Food
Assuming the 90 days trading horizon GOLD ROAD RES is expected to generate 1.3 times more return on investment than Performance Food. However, GOLD ROAD is 1.3 times more volatile than Performance Food Group. It trades about 0.74 of its potential returns per unit of risk. Performance Food Group is currently generating about 0.19 per unit of risk. If you would invest 122.00 in GOLD ROAD RES on October 20, 2024 and sell it today you would earn a total of 20.00 from holding GOLD ROAD RES or generate 16.39% 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. Performance Food Group
Performance |
| Timeline |
| GOLD ROAD RES |
| Performance Food |
GOLD ROAD and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOLD ROAD and Performance Food
The main advantage of trading using opposite GOLD ROAD and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLD ROAD position performs unexpectedly, Performance Food 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 Performance Food will offset losses from the drop in Performance Food's long position.| GOLD ROAD vs. United States Steel | GOLD ROAD vs. Kingdee International Software | GOLD ROAD vs. Easy Software AG | GOLD ROAD vs. Nippon Steel |
| Performance Food vs. Easy Software AG | Performance Food vs. Liberty Broadband | Performance Food vs. GOLD ROAD RES | Performance Food vs. Texas Roadhouse |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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