Correlation Between Golden Metal and Overstock
Can any of the company-specific risk be diversified away by investing in both Golden Metal and Overstock 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 Metal and Overstock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Metal Resources and Overstock, you can compare the effects of market volatilities on Golden Metal and Overstock 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 Metal with a short position of Overstock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Metal and Overstock.
Diversification Opportunities for Golden Metal and Overstock
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Golden and Overstock is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and Overstock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overstock and Golden Metal 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 Metal Resources are associated (or correlated) with Overstock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overstock has no effect on the direction of Golden Metal i.e., Golden Metal and Overstock go up and down completely randomly.
Pair Corralation between Golden Metal and Overstock
Assuming the 90 days trading horizon Golden Metal Resources is expected to generate 0.86 times more return on investment than Overstock. However, Golden Metal Resources is 1.17 times less risky than Overstock. It trades about 0.12 of its potential returns per unit of risk. Overstock is currently generating about -0.02 per unit of risk. If you would invest 800.00 in Golden Metal Resources on November 6, 2024 and sell it today you would earn a total of 2,500 from holding Golden Metal Resources or generate 312.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.73% |
| Values | Daily Returns |
Golden Metal Resources vs. Overstock
Performance |
| Timeline |
| Golden Metal Resources |
| Overstock |
Golden Metal and Overstock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Metal and Overstock
The main advantage of trading using opposite Golden Metal and Overstock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Metal position performs unexpectedly, Overstock 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 Overstock will offset losses from the drop in Overstock's long position.| Golden Metal vs. Taiwan Semiconductor Manufacturing | Golden Metal vs. Lindsell Train Investment | Golden Metal vs. United Airlines Holdings | Golden Metal vs. Tatton Asset Management |
| Overstock vs. Rosslyn Data Technologies | Overstock vs. Empire Metals Limited | Overstock vs. Wheaton Precious Metals | Overstock vs. GlobalData PLC |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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