Correlation Between Gold Road and ASPEN TECHINC
Can any of the company-specific risk be diversified away by investing in both Gold Road and ASPEN TECHINC 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 ASPEN TECHINC 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 ASPEN TECHINC DL, you can compare the effects of market volatilities on Gold Road and ASPEN TECHINC 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 ASPEN TECHINC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and ASPEN TECHINC.
Diversification Opportunities for Gold Road and ASPEN TECHINC
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and ASPEN is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and ASPEN TECHINC DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASPEN TECHINC DL 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 ASPEN TECHINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASPEN TECHINC DL has no effect on the direction of Gold Road i.e., Gold Road and ASPEN TECHINC go up and down completely randomly.
Pair Corralation between Gold Road and ASPEN TECHINC
Assuming the 90 days horizon Gold Road is expected to generate 1.12 times less return on investment than ASPEN TECHINC. In addition to that, Gold Road is 1.23 times more volatile than ASPEN TECHINC DL. It trades about 0.02 of its total potential returns per unit of risk. ASPEN TECHINC DL is currently generating about 0.02 per unit of volatility. If you would invest 20,891 in ASPEN TECHINC DL on August 29, 2024 and sell it today you would earn a total of 2,909 from holding ASPEN TECHINC DL or generate 13.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. ASPEN TECHINC DL
Performance |
| Timeline |
| Gold Road Resources |
| ASPEN TECHINC DL |
Gold Road and ASPEN TECHINC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and ASPEN TECHINC
The main advantage of trading using opposite Gold Road and ASPEN TECHINC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, ASPEN TECHINC 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 ASPEN TECHINC will offset losses from the drop in ASPEN TECHINC's long position.| Gold Road vs. Lamar Advertising | Gold Road vs. SALESFORCE INC CDR | Gold Road vs. ALBIS LEASING AG | Gold Road vs. Jacquet Metal Service |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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