Correlation Between Gold Road and Kering SA
Can any of the company-specific risk be diversified away by investing in both Gold Road and Kering SA 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 Kering SA 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 Kering SA, you can compare the effects of market volatilities on Gold Road and Kering SA 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 Kering SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Kering SA.
Diversification Opportunities for Gold Road and Kering SA
Good diversification
The 3 months correlation between Gold and Kering is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA 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 Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of Gold Road i.e., Gold Road and Kering SA go up and down completely randomly.
Pair Corralation between Gold Road and Kering SA
Assuming the 90 days horizon Gold Road Resources is expected to generate 0.96 times more return on investment than Kering SA. However, Gold Road Resources is 1.04 times less risky than Kering SA. It trades about 0.28 of its potential returns per unit of risk. Kering SA is currently generating about 0.16 per unit of risk. If you would invest 110.00 in Gold Road Resources on September 12, 2024 and sell it today you would earn a total of 19.00 from holding Gold Road Resources or generate 17.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. Kering SA
Performance |
| Timeline |
| Gold Road Resources |
| Kering SA |
Gold Road and Kering SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and Kering SA
The main advantage of trading using opposite Gold Road and Kering SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, Kering SA 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 Kering SA will offset losses from the drop in Kering SA's long position.| Gold Road vs. Franco Nevada | Gold Road vs. Superior Plus Corp | Gold Road vs. SIVERS SEMICONDUCTORS AB | Gold Road vs. Norsk Hydro ASA |
| Kering SA vs. Deckers Outdoor | Kering SA vs. Superior Plus Corp | Kering SA vs. NMI Holdings | Kering SA vs. SIVERS SEMICONDUCTORS AB |
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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