Correlation Between Golden Star and EDP Energias
Can any of the company-specific risk be diversified away by investing in both Golden Star and EDP Energias 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 Golden Star and EDP Energias into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Star Resource and EDP Energias de, you can compare the effects of market volatilities on Golden Star and EDP Energias 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 Golden Star with a short position of EDP Energias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Star and EDP Energias.
Diversification Opportunities for Golden Star and EDP Energias
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Golden and EDP is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Golden Star Resource and EDP Energias de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDP Energias de and Golden Star 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 Golden Star Resource are associated (or correlated) with EDP Energias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDP Energias de has no effect on the direction of Golden Star i.e., Golden Star and EDP Energias go up and down completely randomly.
Pair Corralation between Golden Star and EDP Energias
Given the investment horizon of 90 days Golden Star Resource is expected to generate 7.78 times more return on investment than EDP Energias. However, Golden Star is 7.78 times more volatile than EDP Energias de. It trades about 0.04 of its potential returns per unit of risk. EDP Energias de is currently generating about -0.05 per unit of risk. If you would invest 100.00 in Golden Star Resource on September 4, 2024 and sell it today you would earn a total of 15.00 from holding Golden Star Resource or generate 15.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Golden Star Resource vs. EDP Energias de
Performance |
| Timeline |
| Golden Star Resource |
| EDP Energias de |
Golden Star and EDP Energias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Star and EDP Energias
The main advantage of trading using opposite Golden Star and EDP Energias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Star position performs unexpectedly, EDP Energias 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 EDP Energias will offset losses from the drop in EDP Energias' long position.| Golden Star vs. EDP Energias de | Golden Star vs. EDP Renovaveis | Golden Star vs. Endesa SA ADR | Golden Star vs. Enel SpA |
| EDP Energias vs. Energy of Minas | EDP Energias vs. The AES | EDP Energias vs. Sempra Energy | EDP Energias vs. Iberdrola SA |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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