Correlation Between G8 Education and Gold Road
Can any of the company-specific risk be diversified away by investing in both G8 Education 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 G8 Education and Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G8 Education and Gold Road Resources, you can compare the effects of market volatilities on G8 Education 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 G8 Education with a short position of Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 Education and Gold Road.
Diversification Opportunities for G8 Education and Gold Road
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GEM and Gold is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding G8 Education 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 G8 Education 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 G8 Education 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 G8 Education i.e., G8 Education and Gold Road go up and down completely randomly.
Pair Corralation between G8 Education and Gold Road
Assuming the 90 days trading horizon G8 Education is expected to generate 1.6 times less return on investment than Gold Road. But when comparing it to its historical volatility, G8 Education is 1.36 times less risky than Gold Road. It trades about 0.08 of its potential returns per unit of risk. Gold Road Resources is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 165.00 in Gold Road Resources on August 29, 2024 and sell it today you would earn a total of 21.00 from holding Gold Road Resources or generate 12.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
G8 Education vs. Gold Road Resources
Performance |
| Timeline |
| G8 Education |
| Gold Road Resources |
G8 Education and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G8 Education and Gold Road
The main advantage of trading using opposite G8 Education and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 Education 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.| G8 Education vs. Summit Resources Limited | G8 Education vs. Champion Iron | G8 Education vs. Ridley | G8 Education vs. Peel Mining |
| Gold Road vs. Northern Star Resources | Gold Road vs. Evolution Mining | Gold Road vs. Bluescope Steel | Gold Road vs. Sandfire Resources NL |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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