Correlation Between Fair Oaks and Golden Metal
Can any of the company-specific risk be diversified away by investing in both Fair Oaks and Golden Metal 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 Fair Oaks and Golden Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fair Oaks Income and Golden Metal Resources, you can compare the effects of market volatilities on Fair Oaks and Golden Metal 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 Fair Oaks with a short position of Golden Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Oaks and Golden Metal.
Diversification Opportunities for Fair Oaks and Golden Metal
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fair and Golden is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fair Oaks Income and Golden Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Metal Resources and Fair Oaks 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 Fair Oaks Income are associated (or correlated) with Golden Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Metal Resources has no effect on the direction of Fair Oaks i.e., Fair Oaks and Golden Metal go up and down completely randomly.
Pair Corralation between Fair Oaks and Golden Metal
Assuming the 90 days trading horizon Fair Oaks is expected to generate 5.43 times less return on investment than Golden Metal. But when comparing it to its historical volatility, Fair Oaks Income is 7.02 times less risky than Golden Metal. It trades about 0.21 of its potential returns per unit of risk. Golden Metal Resources is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,600 in Golden Metal Resources on August 30, 2024 and sell it today you would earn a total of 500.00 from holding Golden Metal Resources or generate 19.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fair Oaks Income vs. Golden Metal Resources
Performance |
| Timeline |
| Fair Oaks Income |
| Golden Metal Resources |
Fair Oaks and Golden Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fair Oaks and Golden Metal
The main advantage of trading using opposite Fair Oaks and Golden Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Oaks position performs unexpectedly, Golden Metal 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 Golden Metal will offset losses from the drop in Golden Metal's long position.| Fair Oaks vs. Toyota Motor Corp | Fair Oaks vs. OTP Bank Nyrt | Fair Oaks vs. Cognizant Technology Solutions | Fair Oaks vs. Lendinvest PLC |
| Golden Metal vs. Givaudan SA | Golden Metal vs. Antofagasta PLC | Golden Metal vs. Centamin PLC | Golden Metal vs. Atalaya Mining |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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