Correlation Between Gold Road and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Gold Road and MGIC INVESTMENT 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 MGIC INVESTMENT 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 MGIC INVESTMENT, you can compare the effects of market volatilities on Gold Road and MGIC INVESTMENT 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 MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and MGIC INVESTMENT.
Diversification Opportunities for Gold Road and MGIC INVESTMENT
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gold and MGIC is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT 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 MGIC INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC INVESTMENT has no effect on the direction of Gold Road i.e., Gold Road and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between Gold Road and MGIC INVESTMENT
Assuming the 90 days horizon Gold Road Resources is expected to generate 1.46 times more return on investment than MGIC INVESTMENT. However, Gold Road is 1.46 times more volatile than MGIC INVESTMENT. It trades about 0.29 of its potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.05 per unit of risk. If you would invest 120.00 in Gold Road Resources on November 30, 2024 and sell it today you would earn a total of 29.00 from holding Gold Road Resources or generate 24.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. MGIC INVESTMENT
Performance |
| Timeline |
| Gold Road Resources |
| MGIC INVESTMENT |
Gold Road and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and MGIC INVESTMENT
The main advantage of trading using opposite Gold Road and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, MGIC INVESTMENT 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 MGIC INVESTMENT will offset losses from the drop in MGIC INVESTMENT's long position.| Gold Road vs. STORAGEVAULT CANADA INC | Gold Road vs. alstria office REIT AG | Gold Road vs. Information Services International Dentsu | Gold Road vs. INFORMATION SVC GRP |
| MGIC INVESTMENT vs. Japan Medical Dynamic | MGIC INVESTMENT vs. SALESFORCE INC CDR | MGIC INVESTMENT vs. Tradegate AG Wertpapierhandelsbank | MGIC INVESTMENT vs. Magnachip Semiconductor |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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