Correlation Between Gold Road and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both Gold Road and Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks PLC, you can compare the effects of market volatilities on Gold Road and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Fevertree Drinks.
Diversification Opportunities for Gold Road and Fevertree Drinks
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gold and Fevertree is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Fevertree Drinks PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks PLC 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks PLC has no effect on the direction of Gold Road i.e., Gold Road and Fevertree Drinks go up and down completely randomly.
Pair Corralation between Gold Road and Fevertree Drinks
Assuming the 90 days horizon Gold Road Resources is expected to generate 1.34 times more return on investment than Fevertree Drinks. However, Gold Road is 1.34 times more volatile than Fevertree Drinks PLC. It trades about 0.04 of its potential returns per unit of risk. Fevertree Drinks PLC is currently generating about -0.06 per unit of risk. If you would invest 102.00 in Gold Road Resources on October 10, 2024 and sell it today you would earn a total of 24.00 from holding Gold Road Resources or generate 23.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. Fevertree Drinks PLC
Performance |
| Timeline |
| Gold Road Resources |
| Fevertree Drinks PLC |
Gold Road and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and Fevertree Drinks
The main advantage of trading using opposite Gold Road and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| Gold Road vs. Aristocrat Leisure Limited | Gold Road vs. ARISTOCRAT LEISURE | Gold Road vs. SERI INDUSTRIAL EO | Gold Road vs. GRIFFIN MINING LTD |
| Fevertree Drinks vs. International Game Technology | Fevertree Drinks vs. Jacquet Metal Service | Fevertree Drinks vs. MCEWEN MINING INC | Fevertree Drinks vs. Scientific Games |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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