Correlation Between AECOM TECHNOLOGY and GOLD ROAD
Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY and GOLD ROAD 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 AECOM TECHNOLOGY and GOLD ROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AECOM TECHNOLOGY and GOLD ROAD RES, you can compare the effects of market volatilities on AECOM TECHNOLOGY and GOLD ROAD 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 AECOM TECHNOLOGY with a short position of GOLD ROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and GOLD ROAD.
Diversification Opportunities for AECOM TECHNOLOGY and GOLD ROAD
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AECOM and GOLD is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and GOLD ROAD RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLD ROAD RES and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY are associated (or correlated) with GOLD ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLD ROAD RES has no effect on the direction of AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and GOLD ROAD go up and down completely randomly.
Pair Corralation between AECOM TECHNOLOGY and GOLD ROAD
Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 0.7 times more return on investment than GOLD ROAD. However, AECOM TECHNOLOGY is 1.43 times less risky than GOLD ROAD. It trades about 0.17 of its potential returns per unit of risk. GOLD ROAD RES is currently generating about 0.1 per unit of risk. If you would invest 7,760 in AECOM TECHNOLOGY on September 3, 2024 and sell it today you would earn a total of 3,240 from holding AECOM TECHNOLOGY or generate 41.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AECOM TECHNOLOGY vs. GOLD ROAD RES
Performance |
| Timeline |
| AECOM TECHNOLOGY |
| GOLD ROAD RES |
AECOM TECHNOLOGY and GOLD ROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AECOM TECHNOLOGY and GOLD ROAD
The main advantage of trading using opposite AECOM TECHNOLOGY and GOLD ROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM TECHNOLOGY position performs unexpectedly, GOLD ROAD 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 GOLD ROAD will offset losses from the drop in GOLD ROAD's long position.| AECOM TECHNOLOGY vs. ON SEMICONDUCTOR | AECOM TECHNOLOGY vs. CHINA TONTINE WINES | AECOM TECHNOLOGY vs. COSTCO WHOLESALE CDR | AECOM TECHNOLOGY vs. BJs Wholesale Club |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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