Correlation Between Gold Road and Aluminum
Can any of the company-specific risk be diversified away by investing in both Gold Road and Aluminum 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 Aluminum 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 Aluminum of, you can compare the effects of market volatilities on Gold Road and Aluminum 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 Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Aluminum.
Diversification Opportunities for Gold Road and Aluminum
Very weak diversification
The 3 months correlation between Gold and Aluminum is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminum 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 Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminum has no effect on the direction of Gold Road i.e., Gold Road and Aluminum go up and down completely randomly.
Pair Corralation between Gold Road and Aluminum
Assuming the 90 days horizon Gold Road Resources is expected to generate 0.48 times more return on investment than Aluminum. However, Gold Road Resources is 2.09 times less risky than Aluminum. It trades about 0.48 of its potential returns per unit of risk. Aluminum of is currently generating about 0.18 per unit of risk. If you would invest 122.00 in Gold Road Resources on November 1, 2024 and sell it today you would earn a total of 19.00 from holding Gold Road Resources or generate 15.57% 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. Aluminum of
Performance |
| Timeline |
| Gold Road Resources |
| Aluminum |
Gold Road and Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and Aluminum
The main advantage of trading using opposite Gold Road and Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, Aluminum 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 Aluminum will offset losses from the drop in Aluminum's long position.| Gold Road vs. Tencent Music Entertainment | Gold Road vs. Commonwealth Bank of | Gold Road vs. BANK OF CHINA | Gold Road vs. SUN LIFE FINANCIAL |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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