Correlation Between Gold Road and Grammer AG
Can any of the company-specific risk be diversified away by investing in both Gold Road and Grammer AG 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 Grammer AG 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 Grammer AG, you can compare the effects of market volatilities on Gold Road and Grammer AG 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 Grammer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Grammer AG.
Diversification Opportunities for Gold Road and Grammer AG
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gold and Grammer is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Grammer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grammer AG 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 Grammer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grammer AG has no effect on the direction of Gold Road i.e., Gold Road and Grammer AG go up and down completely randomly.
Pair Corralation between Gold Road and Grammer AG
Assuming the 90 days horizon Gold Road Resources is expected to generate 1.02 times more return on investment than Grammer AG. However, Gold Road is 1.02 times more volatile than Grammer AG. It trades about 0.02 of its potential returns per unit of risk. Grammer AG is currently generating about -0.03 per unit of risk. If you would invest 104.00 in Gold Road Resources on September 3, 2024 and sell it today you would earn a total of 14.00 from holding Gold Road Resources or generate 13.46% 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. Grammer AG
Performance |
| Timeline |
| Gold Road Resources |
| Grammer AG |
Gold Road and Grammer AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and Grammer AG
The main advantage of trading using opposite Gold Road and Grammer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, Grammer AG 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 Grammer AG will offset losses from the drop in Grammer AG'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 |
| Grammer AG vs. Zurich Insurance Group | Grammer AG vs. Waste Management | Grammer AG vs. Ares Management Corp | Grammer AG vs. INSURANCE AUST GRP |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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