Correlation Between Gold Road and NAKED WINES
Can any of the company-specific risk be diversified away by investing in both Gold Road and NAKED WINES 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 NAKED WINES 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 NAKED WINES PLC, you can compare the effects of market volatilities on Gold Road and NAKED WINES 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 NAKED WINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and NAKED WINES.
Diversification Opportunities for Gold Road and NAKED WINES
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gold and NAKED is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and NAKED WINES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAKED WINES 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 NAKED WINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAKED WINES PLC has no effect on the direction of Gold Road i.e., Gold Road and NAKED WINES go up and down completely randomly.
Pair Corralation between Gold Road and NAKED WINES
Assuming the 90 days horizon Gold Road Resources is expected to generate 0.79 times more return on investment than NAKED WINES. However, Gold Road Resources is 1.26 times less risky than NAKED WINES. It trades about 0.46 of its potential returns per unit of risk. NAKED WINES PLC is currently generating about -0.11 per unit of risk. If you would invest 102.00 in Gold Road Resources on September 15, 2024 and sell it today you would earn a total of 27.00 from holding Gold Road Resources or generate 26.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. NAKED WINES PLC
Performance |
| Timeline |
| Gold Road Resources |
| NAKED WINES PLC |
Gold Road and NAKED WINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and NAKED WINES
The main advantage of trading using opposite Gold Road and NAKED WINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, NAKED WINES 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 NAKED WINES will offset losses from the drop in NAKED WINES's long position.| Gold Road vs. Coor Service Management | Gold Road vs. United Airlines Holdings | Gold Road vs. Corporate Travel Management | Gold Road vs. Waste Management |
| NAKED WINES vs. KAUFMAN ET BROAD | NAKED WINES vs. Gold Road Resources | NAKED WINES vs. Chiba Bank | NAKED WINES vs. OAKTRSPECLENDNEW |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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