Correlation Between GOLD ROAD and VULCAN MATERIALS
Can any of the company-specific risk be diversified away by investing in both GOLD ROAD and VULCAN MATERIALS 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 VULCAN MATERIALS 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 VULCAN MATERIALS, you can compare the effects of market volatilities on GOLD ROAD and VULCAN MATERIALS 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 VULCAN MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLD ROAD and VULCAN MATERIALS.
Diversification Opportunities for GOLD ROAD and VULCAN MATERIALS
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GOLD and VULCAN is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and VULCAN MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VULCAN MATERIALS 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 VULCAN MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VULCAN MATERIALS has no effect on the direction of GOLD ROAD i.e., GOLD ROAD and VULCAN MATERIALS go up and down completely randomly.
Pair Corralation between GOLD ROAD and VULCAN MATERIALS
Assuming the 90 days trading horizon GOLD ROAD RES is expected to generate 1.22 times more return on investment than VULCAN MATERIALS. However, GOLD ROAD is 1.22 times more volatile than VULCAN MATERIALS. It trades about 0.06 of its potential returns per unit of risk. VULCAN MATERIALS is currently generating about 0.05 per unit of risk. If you would invest 98.00 in GOLD ROAD RES on August 25, 2024 and sell it today you would earn a total of 17.00 from holding GOLD ROAD RES or generate 17.35% 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. VULCAN MATERIALS
Performance |
| Timeline |
| GOLD ROAD RES |
| VULCAN MATERIALS |
GOLD ROAD and VULCAN MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOLD ROAD and VULCAN MATERIALS
The main advantage of trading using opposite GOLD ROAD and VULCAN MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLD ROAD position performs unexpectedly, VULCAN MATERIALS 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 VULCAN MATERIALS will offset losses from the drop in VULCAN MATERIALS's long position.| GOLD ROAD vs. Rayonier Advanced Materials | GOLD ROAD vs. VULCAN MATERIALS | GOLD ROAD vs. EAGLE MATERIALS | GOLD ROAD vs. Sumitomo Rubber Industries |
| VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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