Correlation Between Future Generation and Gold Road
Can any of the company-specific risk be diversified away by investing in both Future Generation 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 Future Generation and Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Future Generation Global and Gold Road Resources, you can compare the effects of market volatilities on Future Generation 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 Future Generation with a short position of Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Future Generation and Gold Road.
Diversification Opportunities for Future Generation and Gold Road
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Future and Gold is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Future Generation Global and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources and Future Generation 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 Future Generation Global 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 Resources has no effect on the direction of Future Generation i.e., Future Generation and Gold Road go up and down completely randomly.
Pair Corralation between Future Generation and Gold Road
Assuming the 90 days trading horizon Future Generation Global is expected to generate 0.36 times more return on investment than Gold Road. However, Future Generation Global is 2.76 times less risky than Gold Road. It trades about 0.1 of its potential returns per unit of risk. Gold Road Resources is currently generating about 0.03 per unit of risk. If you would invest 111.00 in Future Generation Global on September 14, 2024 and sell it today you would earn a total of 28.00 from holding Future Generation Global or generate 25.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Future Generation Global vs. Gold Road Resources
Performance |
| Timeline |
| Future Generation Global |
| Gold Road Resources |
Future Generation and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Future Generation and Gold Road
The main advantage of trading using opposite Future Generation and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Future Generation 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.| Future Generation vs. Saferoads Holdings | Future Generation vs. ARN Media Limited | Future Generation vs. Dicker Data | Future Generation vs. Bio Gene Technology |
| Gold Road vs. Iron Road | Gold Road vs. MetalsGrove Mining | Gold Road vs. Dicker Data | Gold Road vs. Tombador Iron |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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