Correlation Between Golden Metal and Bunzl PLC
Can any of the company-specific risk be diversified away by investing in both Golden Metal and Bunzl PLC 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 Bunzl PLC 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 Bunzl PLC, you can compare the effects of market volatilities on Golden Metal and Bunzl PLC 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 Bunzl PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Metal and Bunzl PLC.
Diversification Opportunities for Golden Metal and Bunzl PLC
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Golden and Bunzl is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and Bunzl PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl PLC 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 Bunzl PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl PLC has no effect on the direction of Golden Metal i.e., Golden Metal and Bunzl PLC go up and down completely randomly.
Pair Corralation between Golden Metal and Bunzl PLC
Assuming the 90 days trading horizon Golden Metal Resources is expected to generate 3.06 times more return on investment than Bunzl PLC. However, Golden Metal is 3.06 times more volatile than Bunzl PLC. It trades about 0.32 of its potential returns per unit of risk. Bunzl PLC is currently generating about 0.29 per unit of risk. If you would invest 2,800 in Golden Metal Resources on October 24, 2024 and sell it today you would earn a total of 400.00 from holding Golden Metal Resources or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Metal Resources vs. Bunzl PLC
Performance |
| Timeline |
| Golden Metal Resources |
| Bunzl PLC |
Golden Metal and Bunzl PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Metal and Bunzl PLC
The main advantage of trading using opposite Golden Metal and Bunzl PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Metal position performs unexpectedly, Bunzl PLC 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 Bunzl PLC will offset losses from the drop in Bunzl PLC's long position.| Golden Metal vs. Givaudan SA | Golden Metal vs. Atalaya Mining | Golden Metal vs. Central Asia Metals | Golden Metal vs. Metals Exploration Plc |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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