Correlation Between Gold Road and X-FAB Silicon
Can any of the company-specific risk be diversified away by investing in both Gold Road and X-FAB Silicon 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 X-FAB Silicon 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 X FAB Silicon Foundries, you can compare the effects of market volatilities on Gold Road and X-FAB Silicon 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 X-FAB Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and X-FAB Silicon.
Diversification Opportunities for Gold Road and X-FAB Silicon
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gold and X-FAB is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X-FAB Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Gold Road i.e., Gold Road and X-FAB Silicon go up and down completely randomly.
Pair Corralation between Gold Road and X-FAB Silicon
Assuming the 90 days horizon Gold Road Resources is expected to generate 0.86 times more return on investment than X-FAB Silicon. However, Gold Road Resources is 1.17 times less risky than X-FAB Silicon. It trades about 0.07 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.11 per unit of risk. If you would invest 97.00 in Gold Road Resources on August 25, 2024 and sell it today you would earn a total of 18.00 from holding Gold Road Resources or generate 18.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.24% |
| Values | Daily Returns |
Gold Road Resources vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Gold Road Resources |
| X FAB Silicon |
Gold Road and X-FAB Silicon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and X-FAB Silicon
The main advantage of trading using opposite Gold Road and X-FAB Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, X-FAB Silicon 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 X-FAB Silicon will offset losses from the drop in X-FAB Silicon's long position.| Gold Road vs. Franco Nevada | Gold Road vs. Agnico Eagle Mines | Gold Road vs. Superior Plus Corp | Gold Road vs. NMI Holdings |
| X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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