Correlation Between Gold Road and Kaufman Broad
Can any of the company-specific risk be diversified away by investing in both Gold Road and Kaufman Broad 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 Kaufman Broad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Road Resources and Kaufman Broad SA, you can compare the effects of market volatilities on Gold Road and Kaufman Broad 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 Kaufman Broad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Kaufman Broad.
Diversification Opportunities for Gold Road and Kaufman Broad
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gold and Kaufman is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Kaufman Broad SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaufman Broad SA 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 Resources are associated (or correlated) with Kaufman Broad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaufman Broad SA has no effect on the direction of Gold Road i.e., Gold Road and Kaufman Broad go up and down completely randomly.
Pair Corralation between Gold Road and Kaufman Broad
Assuming the 90 days horizon Gold Road Resources is expected to generate 1.45 times more return on investment than Kaufman Broad. However, Gold Road is 1.45 times more volatile than Kaufman Broad SA. It trades about 0.03 of its potential returns per unit of risk. Kaufman Broad SA is currently generating about 0.04 per unit of risk. If you would invest 110.00 in Gold Road Resources on September 4, 2024 and sell it today you would earn a total of 12.00 from holding Gold Road Resources or generate 10.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. Kaufman Broad SA
Performance |
| Timeline |
| Gold Road Resources |
| Kaufman Broad SA |
Gold Road and Kaufman Broad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and Kaufman Broad
The main advantage of trading using opposite Gold Road and Kaufman Broad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, Kaufman Broad 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 Kaufman Broad will offset losses from the drop in Kaufman Broad's long position.| Gold Road vs. ZIJIN MINH UNSPADR20 | Gold Road vs. Barrick Gold | Gold Road vs. Superior Plus Corp | Gold Road vs. NMI Holdings |
| Kaufman Broad vs. Sekisui Chemical Co | Kaufman Broad vs. BARRATT DEVEL UNSPADR2 | Kaufman Broad vs. Superior Plus Corp | Kaufman Broad vs. NMI Holdings |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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