Correlation Between Golden Metal and Premier Foods
Can any of the company-specific risk be diversified away by investing in both Golden Metal and Premier Foods 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 Premier Foods 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 Premier Foods PLC, you can compare the effects of market volatilities on Golden Metal and Premier Foods 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 Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Metal and Premier Foods.
Diversification Opportunities for Golden Metal and Premier Foods
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Golden and Premier is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods 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 Premier Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Foods PLC has no effect on the direction of Golden Metal i.e., Golden Metal and Premier Foods go up and down completely randomly.
Pair Corralation between Golden Metal and Premier Foods
Assuming the 90 days trading horizon Golden Metal Resources is expected to generate 35.85 times more return on investment than Premier Foods. However, Golden Metal is 35.85 times more volatile than Premier Foods PLC. It trades about 0.06 of its potential returns per unit of risk. Premier Foods PLC is currently generating about 0.07 per unit of risk. If you would invest 9.00 in Golden Metal Resources on October 13, 2024 and sell it today you would earn a total of 3,141 from holding Golden Metal Resources or generate 34900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 85.77% |
| Values | Daily Returns |
Golden Metal Resources vs. Premier Foods PLC
Performance |
| Timeline |
| Golden Metal Resources |
| Premier Foods PLC |
Golden Metal and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Metal and Premier Foods
The main advantage of trading using opposite Golden Metal and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Metal position performs unexpectedly, Premier Foods 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 Premier Foods will offset losses from the drop in Premier Foods' long position.| Golden Metal vs. Primary Health Properties | Golden Metal vs. Eco Animal Health | Golden Metal vs. MyHealthChecked Plc | Golden Metal vs. Omega Healthcare Investors |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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